Edgar Filing: Companhia Vale do Rio Doce

Form 6-K

United States
Securities and Exchange Commission

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the
Securities Exchange Act of 1934

For the month of

March 2009

Companhia Vale do Rio Doce

Avenida Graça Aranha, No. 26
20030-900 Rio de Janeiro, RJ, Brazil
(Address of principal executive office)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

(Check One) Form 20-F þ Form 40-F o

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1))

(Check One) Yes o No þ

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7))

(Check One) Yes o No þ

(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

(Check One) Yes o No þ

(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b). 82-____.)

Table of Contents


Press Release

Signature Page

Financial Statements — 12/31/2008

US GAAP

Filed at CVM and SEC on 02/19/2009

Gerência Geral de Controladoria — GECOL

COMPANHIA VALE DO RIO DOCE
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


	Page

Report of Independent Registered Public Accounting Firm		2

Management’s Report on Internal Control Over Financial Reporting		3

Consolidated Balance Sheets as of December 31, 2008 and 2007		4

Consolidated Statements of Income for the three-month periods ended December 31, 2008, September 30, 2008 and December 31, 2007 and for the years ended December 31, 2008, 2007 and 2006		6

Consolidated Statements of Cash Flows for the three-month periods ended December 31, 2008, September 30, 2008 and December 31, 2007 and for the years ended December 31, 2008 2007 and 2006		7

Consolidated Statements of Changes in Stockholders’ Equity for the three-month periods ended December 31, 2008, September 30, 2008 and December 31, 2007 and for the years ended December 31, 2008, 2007 and 2006		8

Notes to the Consolidated Financial Statements		9

Supplemental Financial Information (unaudited)		50


		PricewaterhouseCoopers
		Rua da Cardelária, 65 11° — 15°
		20091-020 Rio de Janeiro, RJ — Bras
		Calxa Postal 949 Telefone (21) 3232-6112
		Fax (21) 2516-6319
		www.pwc.com/br

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders Companhia Vale do Rio Doce

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of cash flows and of changes in stockholders’ equity present fairly, in all material respects, the financial position of Companhia Vale do Rio Doce and its subsidiaries at December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on internal control over financial reporting. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial Statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our aud its also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers
Auditores Independentes

Rio de Janeiro, Brazil
February 19, 2009

Management’s Report on Internal Control over Financial Reporting

The management of Companhia Vale do Rio Doce — VALE is responsible for establishing and maintaining adequate internal control over financial reporting.

The company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, and that the degree of compliance with the policies or procedures may deteriorate.

Vale’s management has assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2008 based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission — COSO. Based on such assessment and criteria, Vale’s management has concluded that the company’s internal control over financial reporting was effective as of December 31, 2008.

The effectiveness of the company’s internal control over financial reporting as of December 31, 2008 has been audited by PricewaterhouseCoopers Auditores Independentes, an independent registered public accounting firm, as stated in their report which appears herein.


By:
	Name:	Roger Agnelli
	Title:	Chief Executive Officer


By:
	Name:	Fabio de Oliveira Barbosa
	Title:	Chief Financial Officer

Date: February 19, 2009

Consolidated Balance Sheets

Expressed in millions of United States Dollars


	December 31,		December 31,
	2008		2007
Assets
Current assets
Cash and cash equivalents		10,331		1,046
Short term investments		2,308		—
Accounts receivable
Related parties		137		281
Unrelated parties		3,067		3,671
Loans and advances to related parties		53		64
Inventories		3,896		3,859
Deferred income tax		583		603
Recoverable taxes		1,993		1,159
Other		870		697

		23,238		11,380


Property, plant and equipment, net, and intangible assets		49,329		54,625
Investments in affiliated companies, joint ventures and other investments		2,408		2,922
Other assets
Goodwill on acquisition of subsidiaries		1,898		3,791
Loans and advances
Related parties		—		3
Unrelated parties		77		127
Prepaid pension cost		622		1,009
Prepaid expenses		223		200
Judicial deposits		1,141		1,124
Advances to suppliers — energy		408		574
Recoverable taxes		394		199
Unrealized gains on derivative instruments		32		673
Other		161		90

		4,956		7,790

TOTAL		79,931		76,717

Consolidated Balance Sheets
Expressed in millions of United States Dollars
(Except number of shares)


				(Continued)

	December 31,			December 31,
	2008			2007

Liabilities and stockholders’ equity
Current liabilities
Suppliers		2,261			2,430
Payroll and related charges		591			734
Current portion of long-term debt		633			1,249
Short-term debt		—			167
Loans from related parties		77			6
Provision for income taxes		502			1,198
Taxes payable and royalties		55			322
Employees postretirement benefits		102			131
Railway sub-concession agreement payable		400			210
Unrealized losses on derivative instruments		—			346
Provisions for asset retirement obligations		48			64
Minimum mandatory dividends payable		2,068			2,683
Other		500			543

		7,237			10,083

Long-term liabilities
Employees postretirement benefits		1,485			2,204
Long-term debt		17,535			17,608
Provisions for contingencies (Note 20 (b))		1,685			2,453
Unrealized losses on derivative instruments		573			5
Deferred income tax		4,005			5,725
Provisions for asset retirement obligations		839			911
Railway sub-concession agreement payable		—			210
Other		1,525			1,687

		27,647			30,803

Minority interests		2,491			2,555


Commitments and contingencies (Note 20)
Stockholders’ equity
Preferred class A stock — 7,200,000,000 no-par-value shares authorized and 2,108,579,618 (2007 — 1,919,516,400) issued		9,727			4,953
Common stock — 3,600,000,000 no-par-value shares authorized and 3,256,724,482 (2007 — 2,999,797,716) issued		15,262			7,742
Treasury stock — 76,854,304 (2007 — 30,341,144) preferred and 74,937,899 (2007 — 56,582,040) common shares		(1,141	)		(389	)
Additional paid-in capital		393			498
Mandatorily convertible notes — common shares		1,288			1,288
Mandatorily convertible notes — preferred shares		581			581
Other cumulative comprehensive income (loss)		(11,510	)		1,655
Undistributed retained earnings		18,340			15,317
Unappropriated retained earnings		9,616			1,631

		42,556			33,276

TOTAL		79,931			76,717

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Income

Expressed in millions of United States Dollars
(Except per share amounts)


	Three-month period ended (unaudited)
	December 31,			September 30,			December 31,			Year ended of December 31,
	2008			2008			2007			2008			2007			2006
Operating revenues, net of discounts, returns and allowances
Sales of ores and metals		6,052			10,425			7,213			32,779			28,441			16,511
Aluminum products		779			889			672			3,042			2,722			2,381
Revenues from logistic services		310			473			389			1,607			1,525			1,376
Other products and services		301			335			138			1,081			427			95

		7,442			12,122			8,412			38,509			33,115			20,363
Taxes on revenues		(187	)		(383	)		(249	)		(1,083	)		(873	)		(712	)

Net operating revenues		7,255			11,739			8,163			37,426			32,242			19,651

Operating costs and expenses
Cost of ores and metals sold		(2,730	)		(4,051	)		(3,687	)		(14,055	)		(13,628	)		(7,946	)
Cost of aluminum products		(529	)		(684	)		(486	)		(2,267	)		(1,705	)		(1,355	)
Cost of logistic services		(190	)		(272	)		(231	)		(930	)		(853	)		(777	)
Other		(71	)		(109	)		(100	)		(389	)		(277	)		(69	)

		(3,520	)		(5,116	)		(4,504	)		(17,641	)		(16,463	)		(10,147	)
Selling, general and administrative expenses		(708	)		(374	)		(424	)		(1,748	)		(1,245	)		(816	)
Research and development expenses		(295	)		(331	)		(262	)		(1,085	)		(733	)		(481	)
Impairment of goodwill		(950	)		—			—			(950	)		—			—
Other		(719	)		(383	)		(290	)		(1,254	)		(607	)		(570	)

		(6,192	)		(6,204	)		(5,480	)		(22,678	)		(19,048	)		(12,014	)

Operating income		1,063			5,535			2,683			14,748			13,194			7,637
Non-operating income (expenses)
Financial income		247			277			58			602			295			327
Financial expenses		(399	)		(457	)		(554	)		(1,765	)		(2,517	)		(1,222	)
Gains (losses) on derivatives, net		(586	)		(587	)		316			(812	)		931			(116	)
Foreign exchange and indexation gains (losses), net		(241	)		(321	)		315			364			2,553			529
Gain on sale of investments		—			—			—			80			777			674

		(979	)		(1,088	)		135			(1,531	)		2,039			192

Income before income taxes, equity results and minority interests		84			4,447			2,818			13,217			15,233			7,829

Income taxes
Current		966			(477	)		(610	)		(1,338	)		(3,901	)		(1,134	)
Deferred		219			621			394			803			700			(298	)

		1,185			144			(216	)		(535	)		(3,201	)		(1,432	)

Equity in results of affiliates, joint ventures and other investments		125			290			136			794			595			710
Minority interests		(27	)		(60	)		(165	)		(258	)		(802	)		(579	)

Net income		1,367			4,821			2,573			13,218			11,825			6,528

Basic and diluted earmings per share
Earnings per preferred share		0.25			0.94			0.52			2.58			2.41			1.35
Earnings per common share		0.25			0.94			0.52			2.58			2.41			1.35
Earnings per prefered share linked to (*)		0.76			1.19			0.79			4.09			3.30			—
Earnings per common share linked to (*)		0.81			1.25			0.85			4.29			3.51			—


(*)		Basic earnings per share only, as dilution assumes conversion.

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Cash Flows

Expressed in millions of United States Dollars


	Three-month period ended (unaudited)
	December 31,			September 30,			December 31,			Year ended of December 31,
	2008			2008			2007			2008			2007			2006
Cash flows from operating activities:
Net income		1,367			4,821			2,573			13,218			11,825			6,528
Adjustments to reconcile net income to cash from operations:
Depreciation, depletion and amortization		568			713			737			2,807			2,186			997
Dividends received		116			126			112			513			394			516
Equity in results of affiliates, joint ventures and other investments		(125	)		(290	)		(136	)		(794	)		(595	)		(710	)
Deferred income taxes		(219	)		(621	)		(394	)		(803	)		(700	)		298
Impairment of goodwill		950			—			—			950			—			—
Loss on disposal of property, plant and equipment		10			243			104			376			168			106
Gain on sale of investments		—			—			—			(80	)		(777	)		(674	)
Foreign exchange and indexation losses (gains), net		740			1,133			(266	)		451			(2,827	)		(917	)
Unrealized derivative losses (gains), net		586			587			(326	)		812			(917	)		116
Minority interests		27			60			165			258			802			579
Unrealized interest (income) expense, net		(3	)		83			(23	)		116			102			36
Others		17			1			46			(3	)		115			(93	)
Decrease (increase) in assets:
Accounts receivable		1,615			(1,481	)		135			(466	)		235			(438	)
Inventories		(43	)		(77	)		(558	)		(467	)		(343	)		859
Others		(171	)		5			80			(242	)		(292	)		(12	)
Increase (decrease) in liabilities:
Suppliers		200			237			429			703			998			(47	)
Payroll and related charges		(25	)		97			106			1			170			(86	)
Income taxes		119			(291	)		(582	)		(140	)		393			84
Others		564			(14	)		260			(96	)		75			90

Net cash provided by operating activities		6,293			5,332			2,462			17,114			11,012			7,232

Cash flows from investing activities:
Short term investments		(1,674	)		(634	)		—			(2,308	)		—			—
Loans and advances receivable
Related parties
Loan proceeds		(3	)		—			(32	)		(37	)		(33	)		(18	)
Repayments		18			15			—			58			10			11
Others		24			(40	)		(1	)		(15	)		1			(16	)
Judicial deposits		(71	)		(26	)		(50	)		(133	)		(125	)		(78	)
Investments		(19	)		(85	)		(230	)		(128	)		(324	)		(107	)
Property, plant and equipment		(3,689	)		(1,553	)		(2,747	)		(8,972	)		(6,651	)		(4,431	)
Proceeds from disposal of investments		—			—			—			134			1,042			837
Proceeds from disposals of property, plant and equipment		—			—			—			—			—			49
Acquisition of subsidiaries, net of cash acquired		—			—			—			—			(2,926	)		(13,201	)

Net cash used in investing activities		(5,414	)		(2,323	)		(3,060	)		(11,401	)		(9,006	)		(16,954	)

Cash flows from financing activities:
Short-term debt, additions		1			65			2,021			1,076			4,483			4,912
Short-term debt, repayments		(125	)		(65	)		(1,877	)		(1,311	)		(5,040	)		(4,233	)
Loans
Related parties
Loan proceeds		33			—			1			54			259			10
Repayments		—			(16	)		(39	)		(20	)		(273	)		(50	)
Issuances of long-term debt
Related parties		—			—			—			—			—			14
Others		253			71			646			1,890			7,212			21,993
Repayments of long-term debt
Others		(65	)		(313	)		(114	)		(1,130	)		(11,130	)		(7,635	)
Treasury stock		(752	)		—			—			(752	)		—			(301	)
Mandatorily convertible notes		—			—			—			—			1,869			—
Capital increase		—			12,190			—			12,190			—			—
Dividends and interest attributed to stockholders		(1,600	)		—			(1,050	)		(2,850	)		(1,875	)		(1,300	)
Dividends to minority interest		(56	)		—			(429	)		(143	)		(714	)		(65	)

Net cash provided by (used in) financing activities		(2,311	)		11,932			(841	)		9,004			(5,209	)		13,345

Increase (decrease) in cash and cash equivalents		(1,432	)		14,941			(1,439	)		14,717			(3,203	)		3,623
Effect of exchange rate changes on cash and cash equivalents		(2,863	)		(2,469	)		(23	)		(5,432	)		(199	)		(216	)
Cash and cash equivalents, beginning of period		14,626			2,154			2,508			1,046			4,448			1,041

Cash and cash equivalents, end of period		10,331			14,626			1,046			10,331			1,046			4,448

Cash paid during the period for:
Interest on short-term debt		—			(1	)		(8	)		(11	)		(49	)		(9	)
Interest on long-term debt		(314	)		(305	)		(361	)		(1,255	)		(1,289	)		(565	)
Income tax		(149	)		(726	)		(732	)		(2,867	)		(3,284	)		(586	)

Non-cash transactions
Interest capitalized		185			14			15			230			78			126
Issuance of preferred stock for the acquisition of Caemi, net of cash acquired		—			—			—			—			—			2,552

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Changes in Stockholders’ Equity

Expressed in millions of United States Dollars
(except number of shares and per-share amounts)


	Three-month period ended (unaudited)
	December 31,			September 30,			December 31,			Year ended of December, 31
	2008			2008			2007			2008			2007			2006
Preferred class A stock (including twelve special shares)
Beginning of the period		9,727			4,953			4,953			4,953			4,702			2,150
Capital increase		—			4,774			—			4,774			—			2,552
Transfer from undistributed retained earnings		—			—			—			—			251			—

End of the period		9,727			9,727			4,953			9,727			4,953			4,702

Common stock
Beginning of the period		15,262			7,742			7,742			7,742			3,806			3,806
Capital increase		—			7,520			—			7,520			—			—
Transfer from undistributed retained earnings		—			—			—			—			3,936			—

End of the period		15,262			15,262			7,742			15,262			7,742			3,806

Treasury stock
Beginning of the period		(389	)		(389	)		(389	)		(389	)		(389	)		(301	)
Acquisitions		(752	)		—			—			(752	)		—			(88	)

End of the period		(1,141	)		(389	)		(389	)		(1,141	)		(389	)		(389	)

Additional paid-in capital
Beginning and end of the period		393			498			498			498			498			498
Change in the period		—			(105	)		—			(105	)		—			—

End of the period		393			393			498			393			498			498

Mandatorily convertible notes — common shares
Beginning and end of the period		1,288			1,288			1,288			1,288			1,288			—

Mandatorily convertible notes — preferred shares
Beginning and end of the period		581			581			581			581			581			—

Other cumulative comprehensive income (deficit)
Cumulative translation adjustments
Beginning of the period		(3,993	)		2,842			1,003			1,340			(1,628	)		(2,856	)
Change in the period		(7,489	)		(6,835	)		337			(12,822	)		2,968			1,228

End of the period		(11,482	)		(3,993	)		1,340			(11,482	)		1,340			(1,628	)

Unrealized gain (loss) — available-for-sale securities, net of tax
Beginning of the period		(79	)		111			229			211			271			127
Change in the period		96			(190	)		(18	)		(194	)		(60	)		144

End of the period		17			(79	)		211			17			211			271

Surplus (deficit) accrued pension plan
Beginning of the period		(304	)		164			540			75			353			460
Change in the period		259			(468	)		(465	)		(120	)		(278	)		(107	)

End of the period		(45	)		(304	)		75			(45	)		75			353

Cash flow hedge
Beginning of the period		28			8			23			29			—			—
Change in the period		(28	)		20			6			(29	)		29			—

End of the period		—			28			29			—			29			—

Total other cumulative comprehensive income (deficit)		(11,510	)		(4,348	)		1,655			(11,510	)		1,655			(1,004	)
Undistributed retained earnings
Beginning of the period		14,183			17,021			6,560			15,317			9,555			4,357
Transfer from/to unappropriated retained earnings		4,157			(2,838	)		8,757			3,023			9,949			5,198
Capitalized earnings		—			—			—			—			(4,187	)		—

End of the period		18,340			14,183			15,317			18,340			15,317			9,555

Unappropriated retained earnings
Beginning of the period		14,521			6,886			10,524			1,631			2,505			3,983
Net income		1,367			4,821			2,573			13,218			11,825			6,528
Interest on mandatorily covertible debt
Preferred class A stock		(15	)		(8	)		(8	)		(46	)		(22	)		—
Common stock		(32	)		(16	)		(18	)		(96	)		(45	)		—
Dividends and interest attributed to stockholders’ equity
Preferred class A stock		(806	)		—			(1,049	)		(806	)		(1,049	)		(1,098	)
Common stock		(1,262	)		—			(1,634	)		(1,262	)		(1,634	)		(1,710	)
Appropriation from/to undistributed retained earnings		(4,157	)		2,838			(8,757	)		(3,023	)		(9,949	)		(5,198	)

End of the period		9,616			14,521			1,631			9,616			1,631			2,505

Total stockholders’ equity		42,556			51,218			33,276			42,556			33,276			19,673


Number of shares:
Preferred class A stock (including twelve special shares)		2,108,579,618			2,108,579,618			1,919,516,400			2,108,579,618			1,919,516,400			1,919,516,400
Common stock		3,256,724,482			3,256,724,482			2,999,797,716			3,256,724,482			2,999,797,716			2,999,797,716
Buy-backs
Beginning of the period		(86,922,944	)		(86,923,052	)		(86,923,184	)		(86,923,184	)		(86,927,072	)		(56,627,872	)
Acquisitions		(64,869,259	)		—			—			(64,869,259	)		—			(30,299,200	)
Sales		—			108			—			240			3,888			—

End of the period		(151,792,203	)		(86,922,944	)		(86,923,184	)		(151,792,203	)		(86,923,184	)		(86,927,072	)

		5,213,511,897			5,278,381,156			4,832,390,932			5,213,511,897			4,832,390,932			4,832,387,044

The accompanying notes are an integral part of these consolidated financial statements.

Notes to the Consolidated Financial Statements
Expressed in millions of United States Dollars, unless otherwise stated

The Company and its operation

Companhia Vale do Rio Doce (“Vale”, the “Company” or “we”) is a limited liability company incorporated in Brazil. Operations are carried out through Vale and our subsidiary companies, joint ventures and affiliates, and mainly consist of mining, non-ferrous metal production, logistics and steel activities.

At December 31, 2008, our principal consolidated operating subsidiaries are the following:

% voting

Head office

Subsidiary

% ownership

capital

location

Principal activity

Alumina do Norte do Brasil S.A. — Alunorte (“Alunorte”)

57.03

59.02

Brazil

Alumina

Alumínio Brasileiro S.A. — Albras (“Albras”)

51.00

Brazil

Aluminum

CADAM S.A (CADAM)

61.48

100.00

Brazil

Kaolin

CVRD Overseas Ltd.

100.00

Cayman Islands

Trading

Ferrovia Centro-Atlântica S. A.

100.00

Brazil

Logistics

Minerações Brasileiras Reunidas S.A. — MBR

92.99

Brazil

Iron ore

Pará Pigmentos S.A. (“PPSA”)

86.17

85.57

Brazil

Kaolin

PT International Nickel Indonesia Tbk (“PT Inco”)

61.16

Indonesia

Nickel

Vale Manganês S.A. (formely Rio Doce Manganês S.A.)

100.00

Brazil

Manganese and Ferroalloys

Vale Manganèse France (formely Rio Doce Manganèse Europe — RDME)

100.00

France

Ferroalloys

Rio Doce Manganese Norway — RDMN

100.00

Norway

Ferroalloys

Vale Australia Pty Ltd.

100.00

Australia

Coal

Vale Inco Limited

100.00

Canada

Nickel

Vale International S.A (formerly CVRD International S.A)

100.00

Swiss

Trading

Valesul Aumínio S.A.

100.00

Brazil

Aluminum

Basis of consolidation

All majority-owned subsidiaries in which we have both share and management control are consolidated. All significant intercompany accounts and transactions are eliminated. Our variable interest entities in which we are the primary beneficiary are consolidated. Investments in unconsolidated affiliates and joint ventures are accounted for under the equity method (Note 12).

We evaluate the carrying value of our equity accounted investments in relation to publicly quoted market prices when available. If the quoted market price is below book value, and such decline is considered other than temporary, we write-down our equity investments to quoted market value.

We define joint ventures as businesses in which we and a small group of other partners each participate actively in the overall entity management, based on a shareholders agreement. We define affiliates as businesses in which we participate as a minority stockholder but with significant influence over the operating and financial policies of the investee.

Our participation in hydroelectric projects are made via consortium contracts under which we have undivided interests in the assets and are liable for our proportionate share of liabilities and expenses, which are based on our proportionate share of power output. We do not have joint liability for any obligations. No separate legal or tax status is granted to consortia under Brazilian law. Accordingly, we recognize our proportionate share of costs and our undivided interest in assets relating to hydroelectric projects (Note 11).

Summary of significant accounting policies

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for, but not limited to, the selection of useful lives of property, plant and equipment, impairment, provisions necessary for contingent liabilities, fair values assigned to assets and liabilities acquired in business combinations, income tax valuation allowances, employee post retirement benefits and other similar evaluations. Actual results could differ from those estimates.

(a)

Basis of presentation

We have prepared our consolidated financial statements in accordance with United States generally accepted accounting principles (“US GAAP”), which differ in certain respects from the accounting practices adopted in “Brazilian GAAP” which are the basis for our statutory financial statements.

In December 2007, significant modifications were made to Brazilian GAAP as part of a convergence project with International Financial Reporting Standards (IFRS). Such changes became effective for the fiscal year ended December 31, 2008, whereas other changes will be introduced subsequently.

Our condensed consolidated interim financial information for the three-month periods ended December 31, 2008, September 30, 2008, and December 31, 2007, presented herein are unaudited. However, in our opinion, such condensed consolidated financial information include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for interim periods.

The Brazilian Real is the parent Company’s functional currency. We have selected the U.S. Dollar as our reporting currency. The financial statements have been translated in accordance with the criteria set forth in Statement of Financial Accounting Standards No. (“SFAS”) 52 — “Foreign Currency Translation”.

All assets and liabilities have been translated to U.S. Dollars at the closing rate of exchange at each balance sheet date (or, if unavailable, the first available exchange rate). All statement of income accounts have been translated to U.S. Dollars at the average exchange rates prevailing during the respective periods. Capital accounts are recorded at historical exchange rates. Translation gains and losses are recorded in the Cumulative Translation Adjustments account (“CTA”) in stockholders’ equity. The results of operations and financial position of our entities that have a functional currency other than the U.S. Dollar, have been translated in accordance with SFAS 52.

The exchange rates used to translate the assets and liabilities of the Brazilian operations at December 31, 2008 and December 31, 2007, were R$ 2.3370 and R$ 1.7713, respectively.

The net transaction gain (loss) included in our statement of income (“Foreign exchange and indexation gains (losses), net”) was US$ (1,011), US$ 1,639 and US$ 452 in the year ended December 31, 2008, 2007 and 2006, respectively.

(b)

Cash equivalents and short-tem investment

Cash flows from overnight investments and fundings are reported net. Short-term investments that have a ready market and original maturities of 90 days or less are classified as “Cash equivalents”. The remaining investments, with longer maturities are stated at fair value and presented as “Short-term investments”.

(c)

Long-term

Assets and liabilities that are realizable or due more than 12 months after the balance sheet date are classified as long-term.

(d)

Inventories

Inventory is recorded at the average cost of purchase or production, reduced to market value (net realizable value less a reasonable margin) when lower.

We classify proven and probable reserve quantities attributable to stockpiled inventories as inventories and account for them as processed when they are removed from the mine. These reserve quantities are not included in the total proven and probable reserve quantities used in the units of production, depreciation, depletion and amortization calculations.

We periodically assess our inventories to identify obsolescence or slow moving and if needed, we recognize definitive allowances for slow movement or obsolete inventories.

(e)

Removal of waste materials to access mineral deposits

Stripping costs (the costs associated with the removal of overburden and other waste materials) incurred during the development of a mine, before production commences, are capitalized as part of the depreciable cost of developing the property. Such costs are subsequently amortized over the useful life of the mine based on proven and probable reserves.

Post-production stripping costs are included in the cost of the inventory produced (that is extracted), at each mine individually during the period that the stripping cost are incurred.

(f)

Property, plant and equipment and Intangible Assets

Property, plant and equipment are recorded at cost, including interest cost incurred during the construction of major new facilities. We compute depreciation on the straight-line basis at annual average rates which take into consideration the useful lives of the assets, as follows: 3.03% for railroads, 3.65% for buildings, 3.78% for installations and 7.30% for other equipment. Expenditures for maintenance and repairs are charged to operating costs and expenses as incurred.

We capitalize the costs of developing major new ore bodies or expanding the capacity of operating mines and amortize these to operations on the unit-of-production method based on the total probable and proven quantity of ore to be recovered. Exploration costs are expensed. Once the economic viability of mining activities is established, subsequent development costs are capitalized.

Separately acquired intangible assets are shown at historical cost. Intangible assets acquired in a business combination are recognized at fair value at the acquisition date. All our intangible assets have definite useful lives and are carried at cost less accumulated amortization, which is calculated using the straight-line method over their estimated useful lives.

(g)

Business combinations

We adopt SFAS 141 “Business Combinations” to record acquisitions of interests in other companies. This “purchase method”, requires that we reasonably determine the fair value of the identifiable tangible and intangible assets and liabilities of acquired companies and segregate goodwill as an intangible asset.

We assign goodwill to reporting units and test each reporting unit’s goodwill for impairment at least annually, and whenever circumstance indicating that recognized goodwill may not be fully recovered are identified. We perform the annual goodwill impairment tests during the last quarter of the year using September 30 as our base date.

Goodwill is reviewed for impairment utilizing a two step process. In the first step, we compare a reporting unit’s fair value with its carrying amount to identify any potential goodwill impairment loss. If the carrying amount of a reporting unit exceeds the unit’s fair value, based on a discounted cash flow analysis, we carry out the second step of the impairment test, measuring and recording the amount, if any, of the unit’s goodwill impairment loss.

(h)

Impairment of long-lived assets

All long-lived assets, are tested to determine if they are recoverable from operating earnings on an undiscounted cash flow basis over their useful lives whenever events or changes in circumstance indicate that the carrying value may not be recoverable.

When we determine that the carrying value of long-lived assets and definite-life intangible assets may not be recoverable, we measure any impairment loss based on a projected discounted cash flow method using a discount rate determined to be commensurate with the risk inherent in our current business model.

(i)

Available-for-sale equity securities

Equity securities classified as “available-for-sale” are recorded pursuant to SFAS 115 “Accounting for Certain Investments in Debt and Equity Securities”. Accordingly, we classify unrealized holding gains and losses, net of taxes, as a separate component of stockholders’ equity until realized.

(j)

Compensated absences

The liability for future compensation for employee vacations is fully accrued as earned.

(k)

Derivatives and hedging activities

We apply SFAS 133 “Accounting for Derivative Financial Instruments and Hedging Activities”, as amended. This standard requires that we recognize all derivative financial instruments as either assets or liabilities on our balance sheet and measure such instruments at fair value. Changes in the fair value of derivatives are recorded in each period in current earnings or in other comprehensive income, in the latter case depending on whether a transaction is designated as an effective hedge and has been effective during the period.

(l)

Asset retirement obligations

Our retirement obligations consist primarily of estimated closure costs, the initial measurement of which is recognized as a liability discounted to present value and subsequently accreted through earnings. An asset retirement cost equal to the initial liability is capitalized as part of the related asset’s carrying value and depreciated over the asset’s useful life.

(m)

Revenues and expenses

Revenues are recognized when title is transferred to the customer or services are rendered. Revenue from exported products is recognized when such products are loaded on board the ship. Revenue from products sold in the domestic market is recognized when delivery is made to the customer. Revenue from logistic services is recognized when the service order has been fulfilled. Expenses and costs are recognized on the accrual basis.

(n)

Income taxes

The deferred tax effects of tax loss carryforwards and temporary differences are recognized pursuant to SFAS 109 “Accounting for Income Taxes”. A valuation allowance is made when we believe that it is more likely than not that tax assets will not be fully recovered in the future.

(o)

Earnings per share

Earnings per share are computed by dividing net income by the weighted average number of common and preferred shares outstanding during the period.

(p)

Interest attributed to stockholders’ equity (dividend)

Brazilian corporations are permitted to distribute interest attributable to stockholders’ equity. The calculation is based on the stockholders’ equity amounts as stated in the statutory accounting records and the interest rate applied may not exceed the long-term interest rate (TJLP) determined by the Brazilian Central Bank. Also, such interest may not exceed 50% of net income for the year nor 50% of retained earnings plus revenue reserves as determined by “Brazilian GAAP”.

As the notional interest charge is tax deductible in Brazil, the benefit to us, as opposed to making a dividend payment, is a reduction in our income tax charge. Income tax of 15% is withheld on behalf of the stockholders relative to the interest distribution. Under Brazilian law, interest attributed to stockholders’ equity is considered as part of the annual minimum mandatory dividend (Note 16). This notional interest distribution is treated for accounting purposes as a deduction from stockholders’ equity in a manner similar to a dividend and the tax credit recorded in income.

(q)

Comprehensive income

We present comprehensive income as part of the Statement of Changes in Stockholders’ Equity, in compliance with SFAS 130 “Reporting Comprehensive Income”, net of taxes.

(r)

Pension and other post retirement benefits

We sponsor private pension and other post retirement benefits for our employees which are actuarially determined and recognized as an asset or liability or both depending on the funded or unfunded status of each plan in accordance with SFAS 158 “Employees’ Accounting for Defined Benefit Pension and Other Post retirement Plans”. The cost of our defined benefit and prior service costs or credits that arise during the period and are not components of net periodic benefit costs are recorded in other cumulative comprehensive income (deficit).

Recently-issued accounting pronouncements

In January 2009, the Financial Accounting Standards Board (“FASB”) issued EITF 99-20-1 “Amendments to the Impairment Guidance of EITF Issue No. 99-20”, to achieve more consistent determination of whether an other-than-temporary impairment has occurred. It is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. We are currently studying the effects of this pronouncement.

In December 2008, the FASB issued Staff Position No. FAS 132(R)-1, “Employers’ Disclosures about Post Retirement Benefit Plan Assets”. It is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2009. We are currently studying the effects of this pronouncement.

In November 2008, the FASB issued EITF 08-08, “Accounting for an Instrument (or an Embedded Feature) with a Settlement Amount That Is Based on the Stock of an Entity’s Consolidated Subsidiary”, which addresses the fair value of an outstanding instrument and its presentation. It is effective for fiscal years and interim periods beginning after December 15, 2008. We are currently studying the effects of this pronouncement.

In November 2008, the FASB issued EITF 08-06, “Equity Method Investment Accounting Considerations”, which clarifies the accounting for certain transactions and impairment considerations involving equity method investments. It is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. We are currently studying the effects of this pronouncement.

In October 2008, the FASB issued Staff Position No. FAS 157-3, “Determining the Fair Value of a Financial Asset in a Market That Is Not Active” (FSP 157-3), which clarifies the application of SFAS 157 when the market for a financial asset is inactive. Specifically, FSP 157-3 clarifies how (1) management’s internal assumptions should be considered in measuring fair value when observable data are not present, (2) observable market information from an inactive market should be taken into account, and (3) the use of broker quotes or pricing services should be considered in assessing the relevance of observable and unobservable data to measure fair value. The guidance in FSP 157-3 was effective immediately upon issuance and did not generate impact on our Financial Statements.

In June 2008, the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities”. The FSP provides that instruments granted in share-based payment transactions that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (EPS) under the two-class method described in paragraphs 60 and 61 of FASB Statement No. 128, Earnings per Share. It is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. Early application is not permitted. We are currently studying the effects of this pronouncement.

In May 2008, the FASB issued FSP APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)”. According to this FSP these debt instruments are not addressed by paragraph 12 of APB Opinion No. 14, Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants. Additionally, it specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008. We are currently studying the effects of this pronouncement.

In May 2008, the FASB issued FAS 162, “The Hierarchy of Generally Accepted Accounting Principles”. The objective of this Statement is to identify the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with US GAAP (the GAAP hierarchy). This Statement shall be effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board (PCAOB) amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. There are no specific disclosure requirements with this statement. We are currently assessing the effects of this Statement and believe that it will not have a material impact on our Consolidation Financial Statements.

In April 2008, the FASB issued FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets”. The objective of this FSP is to address situations of renewing or extending the useful life of a recognized intangible asset. It is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. Early application is not permitted. We are currently studying the effects of this pronouncement.

In December 2007, the FASB issued SFAS 160, which clarifies that a no controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 (that is, in the case of Vale, January 1, 2009).

In December 2007, the FASB issued SFAS 141(R), that applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008 (that is, in the case of Vale, January 1, 2009).

Major acquisitions and disposals

In February 2008, we sold our interest in Jubilee Mines N.L. (held through Vale Inco), representing 4.83% of its common shares, for US$ 134 generating a gain of US$ 80.

In October, 2007 we were awarded, in a public auction, a 30-year sub-concession agreement to operate the Ferrovia Norte Sul S.A. — FNS railway for R$1,482 million equivalent to US$ 837 at the exchange rate in effect on that date, payable in three installments. The first installment, equivalent to US$ 412 and corresponding to 50% was paid in December 2007. The second and third installments, each representing 25% of the total amount, are to be paid upon the completion of the railroad. The outstanding installments are indexed to the general price index (IGP-DI) and accrue interest of 12% p.a. This sub-concession right has been accounted for as an intangible asset (Note 11).

In July 2007, we sold our interest in Lion Ore Mining International Ltd. (held through Vale Inco), representing 1.80% of its common shares for US$ 105, generating a gain of US$ 80.

In June 2007, we sold 25,213,664 common shares, representing 57.84% of the total capital of our subsidiary Log-In Logística Intermodal S.A. (“Log-In”) for US$ 179, recording a gain of US$ 155. In July 2007, we sold an additional 5.10% stake in Log-In for US$ 24 recording a gain of US$ 21. At December 31, 2008, we held 31.33% of the voting and total capital of this entity, which is accounted for under the equity method.

In May 2007, we sold part (12.43%) of our stockholding in Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS, an available-for-sale investee, for US$ 728, recording a gain of US$ 456. We have retained 5.89% of the ordinary shares the minimum number of shares required to participate in the current shareholders agreement of the investee, representing 2.93% of the total capital.

In May 2007, we acquired a further 6.25% of the total share capital of Empreendimentos Brasileiros de Mineração S.A. — EBM, which main asset is its interest in MBR, for US$ 231 and as a result, our direct and indirect stake in MBR increased to 92.99% of total and voting capital. We simultaneously entered into an usufruct agreement with minority shareholders whereby they transferred to us all rights and obligations with respect to their shares, including rights to dividends for the next 30 years, for which we will make an initial payment of US$ 61 plus an annual fee of US$ 48 for each of the next 29 years. The present value of the future obligation is recorded as a liability and the corresponding charge recorded to minority interests in the balance sheet.

In April 2007, we concluded the acquisition of 100% of Vale Australia (formerly AMCI Holdings Australia Pty – AMCI HA), a private company based in Australia, which owns and operates coal mines in that country, for US$ 656.

Income taxes

Income taxes in Brazil comprise federal income tax and social contribution, which is an additional federal tax. The statutory composite enacted tax rate applicable in the periods presented is 34%. In other countries where we have operations, the applicable tax rates vary from 1.67% to 40%.

The amount reported as income tax expense in our consolidated financial statements is reconciled to the statutory rates as follows:


	Three-month period ended (unaudited)
	December 31, 2008									September 30, 2008									December 31, 2007
	Brazil			Foreign			Total			Brazil			Foreign			Total			Brazil			Foreign			Total
Income before income taxes, equity results and minority interests		(2,489	)		2,573			84			334			4,113			4,447			1,299			1,519			2,818


Tax at Brazilian composite rate		846			(875	)		(29	)		(114	)		(1,398	)		(1,512	)		(442	)		(516	)		(958	)
Adjustments to derive effective tax rate:
Tax benefit on interest attributed to stockholders		238			—			238			278			—			278			129			—			129
Difference on tax rates of foreign income		—			347			347			—			808			808			—			777			777
Exchange variation — not taxable		—			667			667			—			633			633			—			(101	)		(101	)
Tax incentives		(48	)		—			(48	)		14			—			14			7			—			7
Other non-taxable gains (losses)		(68	)		78			10			57			(134	)		(77	)		(12	)		(58	)		(70	)


Income taxes per consolidated statements of income		968			217			1,185			235			(91	)		144			(318	)		102			(216	)


	Year ended of December 31,
	2008									2007									2006
	Brazil			Foreign			Total			Brazil			Foreign			Total			Total
Income before income taxes, equity results and minority interests		2,434			10,783			13,217			7,769			7,464			15,233			7,829


Tax at Brazilian composite rate		(828	)		(3,667	)		(4,495	)		(2,641	)		(2,538	)		(5,179	)		(2,662	)
Adjustments to derive effective tax rate:
Tax benefit on interest attributed to stockholders		692			—			692			474			—			474			343
Difference on tax rates of foreign income		—			1,728			1,728			—			1,729			1,729			1,129
Exchange variation — not taxable		—			982			982			—			(290	)		(290	)		(125	)
Tax incentives		53			—			53			173			—			173			194
Valuation allowance reversal (provision)		—			—			—			16			—			16			(21	)
Other non-taxable gains (losses)		287			218			505			64			(188	)		(124	)		(290	)


Income taxes per consolidated statements of income		204			(739	)		(535	)		(1,914	)		(1,287	)		(3,201	)		(1,432	)

We have certain Brazilian income tax incentives relating to our manganese operations in Carajás, our potash operations in Rosario do Catete, our alumina and aluminum operations in Barcarena and our kaolin operations in Ipixuna and Mazagão. The incentives relating to manganese, aluminum and kaolin comprise partial exemption up to 2013. The incentive relating to alumina and potash comprise full income tax exemption on defined production levels, which expires in 2009 and 2013, respectively. An amount equal to the tax saving is appropriated from retained earnings to a reserve account within stockholders’ equity and may not be distributed in the form of cash dividends.

We also have income tax incentives related to our Goro Project under development in New Caledonia (“The Goro Project”). These incentives include an income tax holiday during the construction phase of the project and throughout a 15-year period commencing in the first year in which commercial production, as defined by the applicable legislation, is achieved followed by a five-year, 50 per cent income tax holiday. The Goro Project also qualifies for certain exemptions from indirect taxes such as import duties during the construction phase and throughout the commercial life of the project. Certain of these tax benefits, including the income tax holiday, are subject to an earlier phase out should the project achieve a specified cumulative rate of return. We are subject to a branch profit tax commencing in the first year in which commercial production is achieved, as defined by the applicable legislation. To date, we have not recorded any taxable income for New Caledonian tax purposes. The benefits of this legislation are expected to apply with respect to taxes payable once the Goro project is in operation.

We are subject to examination by the tax authorities for up to five years regarding our operations in Brazil, ten years for Indonesia, and five and six years for Canada, except for Newfoundland which has no limit.

Brazilian tax loss carryforwards have no expiration date though offset is restricted to 30% of annual taxable income.

Effective January 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes”.

The reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:


	As of December 31,
	2008			2007

Beginning of the period		1,046			663

Increase resulting from tax positions taken		103			264
Decrease resulting from tax positions taken		(261	)		(47	)
Changes in tax legislation		2			29
Cumulative translation adjustments		(233	)		137

End of the period		657			1,046

Recognized deferred income tax assets and liabilities are composed as follows:


	As of December 31,
	2008			2007
Current deferred tax assets
Accrued expenses deductible only when disbursed		583			603


Long-term deferred tax assets and liabilities

Assets

Employee postretirement benefits provision		171			461
Tax loss carryforwards		119			348
Other temporary differences		548			—
Asset retirement obligation		207			195

		1,045			1,004

Liabilities
Fair value of financial instruments		(326	)		(173	)
Unrealized tax indexation effects		(108	)		(138	)
Property, plant and equipment		(47	)		(150	)
Prepaid retirement benefit		(199	)		(203	)
Fair value adjustments in business combinations		(4,446	)		(5,770	)
Other temporary differences		198			(191	)

		(4,928	)		(6,625	)

Valuation allowance
Beginning balance		(104	)		(113	)
Translation adjustments		18			(20	)
Change in allowance		(36	)		29

Ending balance		(122	)		(104	)

Net long-term deferred tax liabilities		(4,005	)		(5,725	)

Cash and cash equivalents


	As of December 31,
	2008		2007

Cash		767		424
Short-term investments denominated in Brazilian Reais		7,548		123
Short-term investments denominated in other currencies, mainly U.S. dollars		2,016		499

		10,331		1,046

The increase in cash and cash equivalents corresponds mainly to the proceeds received from the Global equity offering (Note 16).

Accounts receivable


	As of December 31,
	2008			2007
Customers
Denominated in Brazilian Reais		461			750
Denominated in other curriencies, mainly U.S. Dollars		2,828			3,311

		3,289			4,061

Allowance for doubtful accounts		(85	)		(100	)
Allowance for ore weight credits		—			(9	)

Total		3,204			3,952

Accounts receivable from customers in the steel industry represent 47% of receivables at December 31, 2008.

No single customer accounted for more than 10% of total revenues.

Additional allowances for doubtful accounts charged to the statement of income as expenses in 2008 and 2007 totaled US$ 9 and US$ 31, respectively. We wrote-off US$ nil in 2008 and US$ 6 in 2007.

Inventories


	As of December 31,
	2008		2007
Finished products

Nickel (co-products and by-products)		1,514		1,812
Iron ore and pellets		728		588
Manganese and ferroalloys		199		176
Aluminum products		150		106
Kaolin		40		42
Copper concentrate		26		15
Coal		43		38
Others		80		36
Spare parts and maintenance supplies		1,116		1,046

		3,896		3,859

At December 31, 2008, we recorded an adjustment of US$ 77, to reduce nickel inventory to its market value (nil in 2007 and 2006).

Recoverable taxes


	As of December 31,
	2008		2007
Income tax		1,646		643
Value-added tax — ICMS		258		294
PIS and COFINS		380		354
Others		103		67

Total		2,387		1,358

Current		1,993		1,159
Non-current		394		199

		2,387		1,358

11		Property, plant and equipment and intangible assets

		By type of assets:


	As of December 31, 2008						As of December 31, 2007
			Accumulated						Accumulated
	Cost		depreciation		Net		Cost		depreciation		Net
Land		182		—		182		110		—		110
Buildings		3,742		905		2,837		4,086		842		3,244
Installations		9,990		2,748		7,242		10,974		2,889		8,085
Equipment		5,391		1,626		3,765		5,703		1,709		3,994
Railroads		5,830		1,358		4,472		5,819		1,614		4,205
Mine development costs		15,976		2,062		13,914		19,270		1,632		17,638
Others		4,974		1,639		3,335		7,146		1,813		5,333

		46,085		10,338		35,747		53,108		10,499		42,609
Construction in progress		13,582		—		13,582		12,016		—		12,016

Total		59,667		10,338		49,329		65,124		10,499		54,625

Losses on disposal of property, plant and equipment totaled US$ 376, US$ 168 and US$ 106 in 2008, 2007 and 2006, respectively. Mainly relate to losses on sales of ships and trucks, locomotives and other equipment, which were replaced in the normal course of business.

Assets given in guarantee of judicial processes totaled US$ 141.

Hydroelectric assets

We participate in several jointly-owned hydroelectric plants, already in operation or under construction, in which we record our undivided interest in these assets as Property, plant and equipment.

At December 31, 2008 the cost of hydroelectric plants in service totals US$ 1,162 (2007 US$ 803) and the related depreciation in the year was US$ 304 (2007 US$ 68). The cost of hydroelectric plant under construction at December 31, 2008 totals US$ 206 (2007 US$ 735). Income and operating expenses for such plants are not material

Intangibles

All of the intangible assets recognized in our financial statements were acquired from third parties, either directly or through a business combination and have definite useful lives from 6 to 30 years.

At December 31, 2008 the intangibles amount to US$ 875 (December 31, 2007 — US$ 1,113), and are comprised of rights granted by the government – North-South Railroald of US$ 671 and off take-agreements of US$ 204.

Investments in affiliated companies and joint ventures


	2008													Equity in earnings (losses) of investee adjustments									Dividends received
	Participation in						Net income							Three-month period ended (unaudited)																		Three-month period ended (unaudited)
	capital (%)				Net		(loss) for the			Investments				December 31,			September 30,			December 31,			As of December 31,									December 31,		September 30,		December 31,		As of December 31,
	Voting		Total		equity		year			2008		2007		2008			2008			2007			2008			2007			2006			2008		2008		2007		2008		2007		2006
Ferrous
Companhia Nipo-Brasileira de Pelotização — NIBRASCO (1)		51.11		51.00		215		166			110		61		18			36			2			84			12			18			—		—		—		—		—		22
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS (1)		51.00		50.89		143		117			73		43		7			17			(3	)		59			9			15			—		6		—		6		16		13
Companhia Coreano-Brasileira de Pelotização — KOBRASCO (1)		50.00		50.00		109		88			55		45		4			19			4			44			19			17			13		—		21		13		21		21
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO (1)		51.00		50.90		114		66			58		46		14			18			—			34			10			12			—		—		—		—		8		12
Minas da Serra Geral S.A. — MSG		50.00		50.00		42		3			21		30		(1	)		1			1			1			3			2			—		—		—		—		—		1
SAMARCO Mineração S.A. — SAMARCO (2)		50.00		50.00		732		629			412		546		37			82			56			315			242			229			50		112		25		300		150		225
Others		—		—		—		—			26		30		1			2			3			6			6			19			—		—		—		—		—		1

											755		801		80			175			63			543			301			312			63		118		46		319		195		295

Logistics
LOG-IN Logística Intermodal S.A. (3)		31.33		31.33		282		37			94		107		6			3			6			20			8			—			—		—		—		3		—		—
MRS Logística S.A		37.86		41.50		786		273			326		342		87			44			34			113			117			95			—		—		24		34		51		41

											420		449		93			47			40			133			125			95			—		—		24		37		51		41

Holdings
Steel
California Steel Industries Inc. — CSI		50.00		50.00		320		21			160		163		(35	)		18			(7	)		11			(1	)		54			13		—		—		13		11		40
THYSSENKRUPP CSA Companhia Siderúrgica (Cost $431) — available-for-sale		10.46		10.46		—		—			443		388		—			—			—			—			—			—			—		—		—		—		—		—
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS (cost $180) — available-for-sale (5)		—		—		—		—			164		465		—			8			—			18			31			147			—		8		—		18		31		48

											767		1,016		(35	)		26			(7	)		29			30			201			13		8		—		31		42		88

Bauxite
Mineração Rio do Norte S.A. — MRN		40.00		40.00		347		156			140		184		22			18			21			62			84			64			13		—		—		99		64		77
Valesul Alumínio S.A. — VALESUL (5)		100.00		100.00		—		—			—		—		—			—			—			—			—			12			—		—		—		—		—		—

											140		184		22			18			21			62			84			76			13		—		—		99		64		77

Coal
Henan Longyu Resources Co. Ltd		25.00		25.00		703		315			176		115		15			28			12			79			46			31			27		—		42		27		42		15
Shandong Yankuang International Company Ltd		25.00		25.00		44		(66	)		11		23		(17	)		—			2			(17	)		—			(5	)		—		—		—		—		—		—

											187		138		(2	)		28			14			62			46			26			27		—		42		27		42		15

Nickel
Heron Resources Inc (cost $25) — available-for-sale		—		—		—		—			2		34		—			—			—			—			—			—			—		—		—		—		—		—
Jubilee Mines N.L (cost $5) (4) — available-for-sale		—		—		—		—			—		126		—			—			—			—			—			—			—		—		—		—		—		—
Mirabela Nickel Ltd (cost $24) — available-for-sale		—		—		—		—			8		72		—			—			—			—			—			—			—		—		—		—		—		—
Hudbay Minerals (cost $31) available for sale		—		—		—		—			9		—		—			—			—			—			—			—			—		—		—		—		—		—
Corea Nickel Corp		—		—		—		—			21		—		—			—			—			—			—			—			—		—		—		—		—		—
Skye Res ources (6)											—		44		(38	)		—			—			(38	)		—			—			—		—		—		—		—		—
Others		—		—		—		—			13		23		4			—			5			4			9			—			—		—		—		—		—		—

											53		299		(34	)		—			5			(34	)		9			—			—		—		—		—		—		—
Other affiliates and joint ventures
Others		—		—		—		—			86		35		1			(4	)		—			(1	)		—			—			—		—		—		—		—		—

											86		35		1			(4	)		—			(1	)		—			—			—		—		—		—		—		—

											1,233		1,672		(48	)		68			33			118			169			303			53		8		42		157		148		180

Total											2,408		2,922		125			290			136			794			595			710			116		126		112		513		394		516


(1)		Although Vale held a majority of the voting interest of investees accounted for under the equity method, existing veto rights held by minority shareholders under shareholder agreements preclude consolidation;

(2)		Investment includes goodwill of US$ 46 in 2008 and US$ 61 in 2007;

(3)		Consolidation discontinued from June, 2007;

(4)		Sold in February, 2008 (Note 5);

(5)		Equity in results of affilites refers to dividends received.

(6)		Losses considered other than temporary.

Impairment of goodwill

As described on note 3 (g), we test goodwill and long-lived assets for impairment at least annually, or more frequently when events or changes in circumstances indicate that they might be impaired. For impairment test purposes goodwill is allocated to reporting units.

Following the downturn in the economy, which contributed to the decline in the prices of certain commodities produced by us during the last quarter of 2008, we updated our impairment test based on forecasted discounted cash flows. As a result, we determined that the goodwill associated with the acquisition of Vale Inco, included within the reportable segment “Non-ferrous – nickel” was partially impaired. In the case of Vale Inco, goodwill has been allocated by us to the finished products and intermediate products reporting units. The impairment charge recorded in operating results in the fourth quarter of 2008 was US$ 950.

Management determined discounted cash flows based on approved financial budgets. Gross margin projections were based on past performance and management’s expectations of market developments. Information about sales prices are consistent with the forecasts included in industry reports, considering quoted prices when available and when appropriate. The discount rates used reflect specific risks relating to the relevant assets in each reporting unit, depending on their composition and location.

Recognition of additional goodwill impairment charges in the future would depend on several estimates including market conditions, recent actual results and management’s forecasts. This information shall be obtained at the time when our assessment is to be updated. It is not possible at this time to determine if any such future impairment charge would result or, if it does, whether such charge would be material.

Short-term debt

Short-term borrowings outstanding on December 31, 2007, mainly from commercial banks for export financing denominated in U.S. Dollars, with average annual interest rates of 5.5%.

Long-term debt


	Current liabilities				Long-term liabilities
	2008		2007		2008		2007
Foreign debt
Loans and financing denominated in the following currencies:
U.S. Dollars		210		212		5,905		5,927
Others		23		64		167		214
Fixed Rate Notes — US Dollar denominated		—		—		6,510		6,680
Debt securities — export sales (*) — US Dollar denominated		55		53		149		205
Perpetual notes		—		—		83		87
Accrued charges		217		282		—		—

		505		611		12,814		13,113

Brazilian debt
Brazilian Reais indexed to Long-Term Interest Rate — TJLP/CDI		33		586		1,989		1,148
Brazilian Reais indexed to General Price Index-Market (IGPM)		—		1		1		1
Basket of currencies		1		2		4		6
Non-convertible debentures		—		—		2,562		3,340
U.S. Dollars Denominated		—		—		165		—
Accrued charges		94		49		—		—

		128		638		4,721		4,495

Total		633		1,249		17,535		17,608


(*)		Secured by receivables from future export sales.

The long-term portion at December 31, 2008 falls due as follows:


2010			2,304
2011			2,618
2012			1,137
2013			2,556
2014 and thereafter			8,628
No due date (Perpetual notes and non-convertible debentures)			292

			17,535

At December 31, 2008 annual interest rates on long-term debt were as follows:


Up to 3%			690
3.1% to 5%			5,845
5.1% to 7% (*)			5,596
7.1% to 9% (*)			2,136
9.1% to 11%			87
Over 11% (*)			3,729
Variable (Perpetual notes)			85

			18,168


(*)		Includes non-convertible debentures and other Brazilian Reais-denominated debt that bear interest at CDI (Brazilian interbank certificate of deposit) and TJLP (Brazilian government long-term interest) rates plus a spread. For these operations we have entered into derivative transactions to mitigate our exposure on the floating rate debt denominated in Brazilian Reais, totaling US$ 4,169 wich US$ 3,522 has original interest rate above 11%. The average cost after taking into account the derivative transactions is 4.9%.

The indexation indices/ rates applied to our debt were as follows (unaudited):


	Three-month period ended
	December 31,			September 30,			December 31,		Year ended of December 31,
	2008			2008			2007		2008			2007

TJLP — Long-Term Interest Rate (effective rate)		1.5			1.5			1.5		6.3			6.4
IGP-M — General Price Index — Market		1.2			1.6			3.5		9.8			7.8
Appreciation (Devaluation) of Real against U.S. Dollar		(18.1	)		(16.8	)		3.8		(24.2	)		20.7

In January 2008 we entered into a trade finance agreement with a Brazilian bank in the amount of US$ 1,100 with final maturity in 2018.

During 2008, we entered into agreements with Banco Nacional de Desenvolvimento Econômico e Social — BNDES, (the Brazilian National Development Bank) and with long-term Japanese financing agencies, Japan Bank for International Cooperation — JBIC and Nippon Export and Investment Insurance — NEXI related to future lines of credit to finance mining, logistics and power generation projects as part of our investment program for 2008-2012.

Additionally, we have revolving credit lines available under which amounts can be drawn down and repaid at the option of the borrower. At December 31, 2008, the total amount available under revolving credit lines was of US$1,900, of which US$ 1,150 was granted to Vale International and the balance to Vale Inco. As of December 31, 2008, neither Vale International nor Vale Inco had drawn any amounts under these facilities.

Vale Inco had drawn down US$ 101 by way of letters of credit.

At December 31, 2008 the US Dollar denominated Fixed Rate Notes of US$ 6,510 (December 31, 2007 – US$ 6,680) and other debt of US$ 11,102 (December 31, 2007 – US$ 11,511) are unsecured. The export securitization of US$ 204 (December 31, 2007 – US$ 258) represents debt securities collateralized by receivables from future export sales of CVRD Overseas Ltd.. Loans from international lenders of US$ 57 (December 31, 2007 – US$ 82) are guaranteed by the Brazilian Federal Government, to which we have provided like counter guarantees. The remaining long-term debt of US$ 295 (December 31, 2007 – US$ 326) is collateralized mainly by receivables.

Our principal covenants require us to maintain certain ratios, such as debt to EBITDA and interest coverage. We were in full compliance with our financial covenants as of December 31, 2008 and 2007.

Stockholders’ equity

Each holder of common and preferred class A stock is entitled to one vote for each share on all matters brought before stockholders’ meetings, except for the election of the Board of Directors, which is restricted to the holders of common stock. The Brazilian Government holds twelve preferred special shares which confer permanent veto rights over certain matters.

Both common and preferred stockholders are entitled to receive a mandatory minimum dividend of 25% of annual adjusted net income under Brazilian GAAP, once declared at the annual stockholders’ meeting. In the case of preferred stockholders, this dividend cannot be less than 6% of the preferred capital as stated in the statutory accounting records or, if greater, 3% of the Brazilian GAAP equity value per share. For the year ended December 31, 2008, this dividends corresponds to US$ 2,068, provided against stockholders’ equity.

In July 2008, we issued 80,079,223 common ADS, 176,847,543 common shares, 63,506,751 preferred ADS and 100,896,048 preferred shares through a Global equity offering. Our capital increased by US$ 11,666, upon subscription of preferred stock of US$ 4,146 corresponding to 164,402,799 shares and common stock of US$ 7,520 corresponding to 256,926,766 shares. In August, 2008, we issued an additional 24,660,419 preferred shares, representing an increase of US$ 628. After the closing of the operation, our capital stock increased by US$ 12,294 in 2008; the transaction costs of US$ 105 were recorded as a reduction of the additional paid-in capital account.

In September 2007, a stock split was effected whereby each existing common and preferred share was split into two shares. After the split our capital comprises 4,919,314,116 shares, of which 1,919,516,400 are preferred class “A” shares and 2,999,797,716 are common shares, including twelve special class shares without par value (“Golden Shares”). All references to numbers of share and per share amounts included herein reflect retroactive application of the stock split.

In June 2007, we issued US$ 1,880 Mandatorily Convertible Notes due June 15, 2010 for total proceeds of US$ 1,869, net of commissions. The Notes bear interest at 5.50% per year payable quarterly and additional interest which will be payable based on the net amount of cash distribution paid to ADS holders. A tranche of US$ 1,296 Notes are mandatorily convertible into an aggregate maximum of 56,582,040 common shares and a tranche of US$ 584 Notes are mandatorily convertible into an aggregate maximum of 30,295,456 preferred class A shares. On the maturity date (whether at stated maturity or upon acceleration following an event of default), the Series RIO Notes will automatically convert into ADSs, each ADS representing one common share of Vale, and the Series RIO P Notes will automatically convert into ADSs, each ADS representing one preferred class A share of Vale. We currently hold the shares to be issued on conversion in treasury. The Notes are not repayable in cash. Holders of notes will have no voting rights. We will pay to the holders of our Series RIO Notes or RIO P Notes additional interest in the event that Vale makes cash distributions to all holders of RIO ADSs or RIO P ADSs, respectively. We determined, using a statistical model, that the potential variability in the number of shares to be converted is not a predominant feature of this hybrid financial instrument and thus classified it as an equity instrument within stockholders’ equity. Other than during the cash acquisition conversion period, holders of the notes have the right to convert their notes, in whole or in part, at any time prior to maturity in the case of the Series RIO Notes, into RIO ADSs at the minimum conversion rate of 0.8664 RIO ADSs per Series RIO Note, and in the case of Series RIO P Notes, into RIO P ADSs at the minimum conversion rate of 1.0283 RIO P ADSs per Series RIO P Note.

In April 2007, at an Extraordinary Shareholders’ Meeting, paid-up capital was increased by US$ 4,187 through transfer of reserves, without issuance of shares, to US$ 12,695.

Brazilian law permits the payment of cash dividends only from retained earnings as stated in the BR GAAP statutory records and such payments are made in Brazilian Reais. Pursuant to the Company’s statutory books, undistributed retained earnings at December 31, 2008 total US$ 16,854, comprising the unrealized income and expansion reserves, which could be freely transferred to retained earnings and paid as dividends, if approved by the stockholders, after deducting of the minimum annual mandatory dividend.

No withholding tax is payable on distribution of profits earned except for distributions in the form of interest attributed to stockholders’ equity (Note 3 (p)).

Brazilian laws and our By-laws require that certain appropriations be made from retained earnings to reserve accounts on an annual basis, all determined in accordance with amounts stated in the statutory accounting records, as detailed below:


	Three-month period ended (unaudited)
	December 31,			September 30,			December 31,			Year ended of December 31,
	2008			2008			2007			2008			2007			2006
Undistributed retained earnings
Unrealized income reserve
Beginning of the period		67			73			105			73			57			101
Transfer from (to) retained earnings		(22	)		(6	)		(32	)		(28	)		16			(44	)

End of the period		45			67			73			45			73			57
Expansion reserve
Beginning of the period		12,857			13,881			5,726			13,881			8,485			3,621
Transfer to capital stock		—			—			—			—			(3,776	)		—
Transfer from (to) retained earnings		3,952			(1,024	)		8,155			2,928			9,172			4,864

End of the period		16,809			12,857			13,881			16,809			13,881			8,485
Legal reserve
Beginning of the period		1,212			1,310			724			1,310			970			599
Transfer to capital stock		—			—			—			—			(370	)		—
Transfer from (to) retained earnings		236			(98	)		586			138			710			371

End of the period		1,448			1,212			1,310			1,448			1,310			970
Fiscal incentive investment reserve
Beginning of the period		47			53			5			53			43			36
Transfer to capital stock		—			—			—			—			(41	)		—
Transfer from (to) retained earnings		(9	)		(6	)		48			(15	)		51			7

End of the period		38			47			53			38			53			43

Total undistributed retained earnings		18,340			14,183			15,317			18,340			15,317			9,555

			The purpose and basis of appropriation to such reserves is described below:

			Unrealized income reserve — this represents principally our share of the earnings of affiliates and joint ventures, not yet received in the form of cash dividends.

			Expansion reserve — this is a general reserve for expansion of our activities.

			Legal reserve — this reserve is a requirement for all Brazilian corporations and represents the appropriation of 5% of annual net income up to a limit of 20% of capital stock all determined under Brazilian GAAP.

			Fiscal incentive investment reserve — this reserve results from an option to designate a portion of income tax otherwise payable for investment in government approved projects and is recorded in the year following that in which the taxable income was earned. As from 2000, this reserve basically contemplates income tax incentives (Note 6).

Basic and diluted earnings per share

Basic and diluted earnings per share amounts have been calculated as follows:


	Three-month period ended (unaudited)
	December 31,			September 30,			December 31,			As of December 31,
	2008			2008			2007			2008			2007			2006
Net income for the period		1,367			4,821			2,573			13,218			11,825			6,528


Interest attributed to preferred convertible notes		(15	)		(8	)		(8	)		(46	)		(16	)		—
Interest attributed to common convertible notes		(32	)		(16	)		(18	)		(96	)		(37	)		—

Net income for the period adjusted		1,320			4,797			2,547			13,076			11,772			6,528

Basic and diluted earnings per share

Income available to preferred stockholders		507			1,850			978			5,027			4,552			2,568
Income available to common stockholders		791			2,866			1,524			7,823			7,092			3,960
Income available to convertible notes linked to preferred shares		8			28			16			78			45			—
Income available to convertible notes linked to common shares		14			53			29			148			83			—
Weighted average number of shares outstanding (thousands of shares) — preferred shares		2,042,341			1,976,727			1,889,175			1,946,454			1,889,171			1,908,852
Weighted average number of shares outstanding (thousands of shares) — common shares		3,185,750			3,063,752			2,943,216			3,028,817			2,943,216			2,943,216
Treasury preferred shares linked to mandatorily convertible notes		30,295			30,295			30,295			30,295			18,478			—
Treasury common shares linked to mandatorily convertible notes		56,582			56,582			56,582			56,582			34,510			—

Total		5,314,968			5,127,356			4,919,268			5,062,148			4,885,375			4,852,068


Earnings per preferred share		0.25			0.94			0.52			2.58			2.41			1.35
Earnings per common share		0.25			0.94			0.52			2.58			2.41			1.35
Earnings per convertible notes linked to preferred share (*)		0.76			1.19			0.79			4.09			3.30			—
Earnings per convertible notes linked to common share (*)		0.81			1.25			0.85			4.29			3.51			—


(*)		Basic earnings per share only, as dilution assumes conversion.

Had the conversion of the convertible notes been included in the calculation of diluted earnings per share they would have generated the following dilutive effect as shown below:


	Three-month period ended (unaudited)
	December 31,		September 30,		December 31,		As of December 31,
	2008		2008		2007		2008		2007		2006

Income available to preferred stockholders		530		1,885		1,002		5,151		4,613		—
Income available to common stockholders		837		2,936		1,571		8,067		7,212		—
Weighted average number of shares outstanding (thousands of shares) — preferred shares		2,072,636		2,007,022		1,919,470		1,976,749		1,907,649		—
Weighted average number of shares outstanding (thousands of shares) — common shares		3,242,332		3,120,334		2,999,798		3,085,399		2,977,726		—
Earnings per preferred share		0.26		0.94		0.52		2.61		2.42		—
Earnings per common share		0.26		0.94		0.52		2.61		2.42		—

Other cumulative comprehensive income (deficit)


	Three-month period ended (unaudited)
	December 31,			September 30,			December 31,			As of December 31,
	2008			2008			2007			2008			2007			2006
Comprehensive income (deficit) is comprised as follows:
Net income		1,367			4,821			2,573			13,218			11,825			6,528
Cumulative translation adjustments		(7,489	)		(6,835	)		337			(12,822	)		2,968			1,228
Unrealized gain (loss) — available-for-sale securities, net of tax		96			(190	)		(18	)		(194	)		(60	)		144
Surplus (deficit) accrued pension plan		259			(468	)		(465	)		(120	)		(278	)		(107	)
Cash flow hedge		(28	)		20			6			(29	)		29			—

Total comprehensive income (deficit)		(5,795	)		(2,652	)		2,433			53			14,484			7,793


Tax effect on other comprehensive income allocated to each component

Unrealized gain (loss) — available-for-sale securities, net of tax
Gross balance as of the period end		42			(105	)		271			42			271			395
Tax (expense) benefit		(25	)		26			(60	)		(25	)		(60	)		(124	)

Net balance as of the period end		17			(79	)		211			17			211			271

Surplus accrued pension plan
Gross balance as of the period end		(76	)		(415	)		134			(76	)		134			540
Tax (expense) benefit		31			111			(59	)		31			(59	)		(187	)

Net balance as of the period end		(45	)		(304	)		75			(45	)		75			353

Pension plans

Since 1973 we sponsor a supplementary social security plan with characteristics of a defined benefit plan (the “Old Plan”) covering substantially all Brazilian employees, with benefits calculated based on years of service, age, contribution salary and supplementary social security benefits. This plan is administered by Fundação Vale do Rio Doce de Seguridade Social – VALIA and was funded by monthly contributions made by us and our employees, calculated based on periodic actuarial appraisals.

In May 2000, we implemented a new supplementary social security plan with characteristics of defined contribution, which complements the earnings of programmed retirements. The plan offers benefits to cover death, physical invalidity, and sickness, with defined benefit characteristics. Brazilian employees could opt to migrate to the “New Plan” (a Benefit Mix Plan – Vale Mais) which was taken up by over 98% of our employees. The Old Plan will continue in existence, covering almost exclusively retired participants and their beneficiaries.

Additionally we provide supplementary payments to a specific group of former Brazilian employees, in addition to the regular benefits from Valia. The plan provides represents a postretirement health care, dental and pharmaceutical benefits.

Upon the acquisition of Inco, we assumed benefits through defined benefit pension plans that cover essentially all its employees and post retirement benefits other than pensions that also provide certain health care and life insurance benefits for retired employees.

The following information details the status of the defined benefit elements of all plans in accordance with SFAS 132 “Employers’ Disclosure about Pensions and Other Post retirement Benefits” and SFAS 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”, as amended.

(a)

Change in benefit obligation


	As of December 31,
	2008									2007
	Overfunded			Underfunded			Underfunded			Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits			pension plans			pension plans			other benefits
Benefit obligation at beginning of year		3,178			4,436			1,671			2,531			3,743			1,287
Liability recognized upon consolidation of Inco		—			—			—			—			100			213
Service cost		11			60			25			9			61			20
Interest cost		309			245			85			306			229			78
Plan amendment		—			16			—			—			4			—
Benefits paid		(283	)		(291	)		(70	)		(301	)		(279	)		(63	)
Effect of exchange rate changes		(779	)		(775	)		(272	)		526			607			215
Actuarial loss (gain)		(12	)		(660	)		(370	)		107			(29	)		(79	)

Benefit obligation at end of year		2,424			3,031			1,069			3,178			4,436			1,671

We use a measurement date of December 31 for our pension and post retirement benefit plans.

(b)

Change in plan assets


	As of December 31,
	2008									2007
	Overfunded			Underfunded			Underfunded			Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits			pension plans			pension plans			other benefits
Fair value of plan assets at beginning of year		4,187			3,762			10			3,508			3,078			4
Actual return on plan assets		57			(603	)		1			250			85			1
Employer contributions		41			272			70			33			372			67
Benefits paid		(283	)		(291	)		(70	)		(301	)		(279	)		(63	)
Effect of exchange rate changes		(959	)		(633	)		(2	)		697			506			1

Fair value of plan assets at end of year		3,043			2,507			9			4,187			3,762			10

Plan assets at December 31, 2008 include US$ 188 (US$ 693 at December 31, 2007) and US$ 53 (US$ 73 at December 31, 2007) of portfolio investments in our own shares and debentures, respectively, and US$ 44 (US$ 48 at December 31, 2007) and US$ nil (US$ nil at December 31, 2007) of shares of related parties and debentures, as well. They also include US$ 2,472 of Brazilian Federal Government securities (US$ 1,116 at December 31, 2007) and US$ 347 of Canada Federal Government securities (US$ 475 at December 31, 2007).

(c)

Funded Status and Financial Position


	As of December 31,
	2008						2007
	Overfunded		Underfunded		Underfunded		Overfunded		Underfunded		Underfunded
	pension plans		pension plans		other benefits		pension plans		pension plans		other benefits
Other assets		619		—		3		1,009		—		—
Current liabilities		—		38		64		—		54		77
Long-term liabilities		—		486		999		—		620		1,584

Funded status		619		524		1,060		1,009		674		1,661

(d)

Assumptions used (nominal terms)


	Brazil
	2008									2007
	Overfunded			Underfunded			Underfunded			Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits			pension plans			pension plans			other benefits
Discount rate		11.28	% p.a.		11.28	% p.a.		11.28	% p.a.		10.24	% p.a.		10.24	% p.a.		10.24	% p.a.
Expected return on plan assets		12.22	% p.a.		13.00	% p.a.		—			12.78	% p.a.		11.70	% p.a.		—
Rate of compensation increase — up to 47 years		7.12	% p.a.		—			—			7.12	% p.a.		—			—
Rate of compensation increase — over 47 years		4.00	% p.a.		—			—			4.00	% p.a.		—			—
Inflation		4.00	% p.a.		4.00	% p.a.		4.00	% p.a.		4.00	% p.a.		4.00	% p.a.		4.00	% p.a.
Health care cost trend rate		—			—			7.12	% p.a.		—			—			7.64	% p.a.


	Foreign
	2008
	Overfunded		Underfunded			Underfunded			Overfunded		Underfunded			Underfunded
	pension plans		pension plans			other benefits			pension plans		pension plans			other benefits
Discount rate		—		5.58	% p.a.		7.32	% p.a.		—		5.21	% p.a.		5.55	% p.a.
Expected return on plan assets		—		6.99	% p.a.		7.35	% p.a.		—		7.18	% p.a.		7.50	% p.a.
Rate of compensation increase — up to 47 years		—		4.12	% p.a.		3.58	% p.a.		—		4.01	% p.a.		3.58	% p.a.
Rate of compensation increase — over 47 years		—		4.12	% p.a.		3.58	% p.a.		—		4.01	% p.a.		3.58	% p.a.
Inflation		—		2.00	% p.a.		2.00	% p.a.		—		2.00	% p.a.		2.00	% p.a.
Health care cost trend rate		—		—			6.19	% p.a.		—		—			6.35	% p.a.

(e)

Investment targets and composition of plan assets

•

Overfunded pension plans

The fair value of the Brazil overfunded pension plan assets is US$ 3,043 and US$ 4,187 at December 31, 2008 and 2007, respectively. There are no foreign overfunded pension plans assets at the period end. The asset allocation for these plans at December 31, 2008 and 2007, and the target allocation for 2009, by asset category, follows:


	Percentage of plan assets Brazil
				At December 31,
	Target for 2009			2008			2007
	(Unaudited)

Equity securities		26	%		20	%		29	%
Real estate		6	%		4	%		4	%
Loans		7	%		6	%		4	%
Fixed Income		61	%		70	%		63	%

Total		100	%		100	%		100	%

•

Underfunded pension plans

The fair value of the underfunded pension plan assets is US$ 146 and US$ 146 at the end of 2008 and 2007, respectively, for Brazilian plans and US$ 2,361 and US$ 3,616 at the end of 2008 and 2007, respectively, for foreign plans. The asset allocation for these plans at the end of 2008 (Brazil and foreign) and 2007 (Brazil and foreign), and the target allocation for 2009, by asset category, follows:


	Percentage of plan assets Brazil
				At December 31,
	Target for 2009			2008			2007
	(Unaudited)

Loans		0	%		0	%		5	%
Fixed Income		100	%		100	%		95	%

Total		100	%		100	%		100	%


	Percentage of plan assets Foreign
				At December 31,
	Target for 2009			2008			2007

Equity securities		61	%		54	%		61	%
Fixed Income		39	%		46	%		39	%

Total		100	%		100	%		100	%

The asset allocation policy follows the asset class targets determined by our ALM – Asset Allocation Modelling. The fixed income asset allocation target for the Brazilian plans was established in order to surpass the benefit obligation and to be used for the payment of short-term plans. The proposal for 2009 is to increase the investments in inflation-indexed bonds.

The target for equity securities of these plans reflects the expected appreciation of the Brazilian stock markets and its expected long term return.

The asset allocation policy for the foreign plans of 39% fixed income and 61% equity securities, approximates the policy mix through a rebalancing policy.

•

Underfunded other benefits

The fair value of the foreign underfunded other benefit assets is US$ 9 and US$ 10 at the end of 2008 and 2007, respectively. There are no Brazilian underfunded other benefit assets in our postretirement benefit other than pensions at the period end.

The asset allocation for these benefits at the end of 2008 and target allocation for 2009, by asset category, follows:


	Percentage of plan assets Foreign
				At December 31,
	Target for 2009			2008			2007
	(Unaudited)

Equity securities
Fixed Income		61	%		61	%		61	%
Total		39	%		39	%		39	%

		100	%		100	%		100	%

The asset allocation policy is the same for the foreign underfunded pension plan.

(f)

Pension costs


	Three-month period ended (unaudited)
	December 31, 2008
	Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits
Service cost — benefits earned during the period		3			13			5
Interest cost on projected benefit obligation		86			53			21
Expected return on assets		(143	)		(57	)		(5	)
Amortization of initial transition obligation		4			(2	)		6
Net deferral		(1	)		11			(2	)

Net periodic pension cost		(51	)		18			25


	Three-month period ended (unaudited)
	September 30, 2008
	Overfunded			Underfunded			Underfunded other
	pension plans			pension plans			other benefits
Service cost — benefits earned during the period		3			15			6
Interest cost on projected benefit obligation		87			66			21
Expected return on assets		(145	)		(63	)		—
Amortization of initial transition obligation		4			2			(2	)
Net deferral		(2	)		—			—

Net periodic pension cost		(53	)		20			25


	Three-month period ended (unaudited)
	December 31, 2007
	Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits
Service cost — benefits earned during the period		3			18			6
Interest cost on projected benefit obligation		110			76			26
Expected return on assets		(205	)		(73	)		(4	)
Amortization of initial transition obligation		5			—			—
Net deferral		(6	)		—			—

Net periodic pension cost		(93	)		21			28


	As of December 31,
	2008									2007
	Overfunded			Underfunded			Underfunded			Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits			pension plans			pension plans			other benefits
Service cost — benefits earned during the period		11			60			25			9			61			20
Interest cost on projected benefit obligation		309			245			85			306			229			78
Expected return on assets		(515	)		(253	)		(5	)		(570	)		(247	)		(4	)
Amortization of initial transition obligation		15			—			—			14			—			—
Net deferral		(5	)		11			(2	)		(17	)		—			—

Net periodic pension cost		(185	)		63			103			(258	)		43			94

(g)		Expected contributions and benefits

		Employer contributions expected for 2009 are US$ 338.

		The benefit payments, which reflect future service, are expected to be made as follows:


	Overfunded		Underfunded		Underfunded
	pension plans		pension plans		other benefits		Total

2009		195		262		68		525
2010		197		263		72		532
2011		199		261		76		536
2012		200		260		79		539
2013		201		256		82		539
2014 and thereafter		1,011		1,265		412		2,688

(h)

Accumulated benefit obligation


	2008									2007
	Overfunded			Underfunded			Underfunded			Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits			pension plans			pension plans			other benefits

Accumulated benefit obligation		2,415			2,955			1,069			3,166			4,293			1,671
Projected benefit obligation		2,424			3,031			1,069			3,178			4,436			1,671
Fair value of plan assets		(3,043	)		(2,507	)		(9	)		(4,187	)		(3,762	)		(10	)

(i)

Impact of 1% variation in assumed health care cost trend rate


	1% increase				1% decrease
	2008		2007		2008			2007

Accumulated postretirement benefit obligation (APBO)		134		261		(110	)		(201	)
Interest and service costs		18		15		(14	)		(12	)

(j)

Other Cumulative Comprehensive Income (Deficit)


	As of December 31,
	2008									2007
	Overfunded			Underfunded			Underfunded			Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits			pension plans			pension plans			other benefits
Net transition assets		(16	)		—			—			(24	)		—			—
Net actuarial loss / (gain)		(240	)		(206	)		282			(6	)		(34	)		97
Effect of exchange rate changes		(18	)		10			3			94			(7	)		(2	)
Deferred income tax		94			83			(106	)		(22	)		14			(35	)

Amounts recognized in other cumulative comprehensive income (deficit)		(180	)		(113	)		179			42			(27	)		60

(k)

Change in Other Cumulative Comprehensive Income (Deficit)


	As of December 31,
	2008									2007
	Overfunded			Underfunded			Underfunded			Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits			pension plans			pension plans			other benefits
Net transition obligation / (asset) not yet recognized in NPPC at beginning of period		(31	)		—			—			(38	)		—			—
Net actuarial loss / (gain) not yet recognized in NPPC at beginning of period		94			(41	)		(14	)		491			(33	)		(11	)
Deferred income tax at beginning of period		(21	)		14			5			(154	)		11			4

Effect of initial recognition of cumulative comprehensive Income (deficit)		42			(27	)		(9	)		299			(22	)		(7	)
Change in the period
Amortization of net transition obligation / (asset)		15			—			—			14			—			—
Amortization of net actuarial loss / (gain)		(6	)		—			—			(17	)		—			—
Total net actuarial loss / (gain) arising during period		(328	)		(165	)		296			(480	)		(1	)		108
Effect of exchange rate changes		(18	)		10			3			94			(7	)		(2	)
Deferred income tax		115			69			(111	)		132			3			(39	)

Total recognized in other cumulative comprehensive income (deficit)		(180	)		(113	)		179			42			(27	)		60

(l)

Net periodic pension cost for 2009


	As of December 31,
	2009
	Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits
Service cost		9			41			17
Interest cost		263			240			85
Expected return on plan assets		(362	)		(195	)		(1	)
Net transition obligation / (asset) amortization		12			—			—
Net prior service cost / (credit) amortization		—			3			—
Net actuarial loss / (gain) amortization		—			1			(23	)

		(78	)		90			78

19		Long-term incentive compensation plan

		In 2008, the Board of Directors approved a long-term incentive compensation plan, which was implemented in April 2008, over a three-year cycle (2008 to 2010).

		Under the terms of the plan, the participants, restricted to certain executives, may elect to allocate part of their annual bonus to the plan. The allocation is applied to purchase preferred shares of Vale, through a predefined financial institution, at market conditions and with no benefit provided by Vale.

		The shares purchased by each executive are unrestricted and may, at the participant’s discretion, be sold at any time. However, the shares must be held for a three-year period and the executive must be continually employed by Vale during that period. The participant then becomes entitled to receive from Vale, a cash payment equivalent to the total amount of shares held, based on market rates.

		We account for the compensation cost provided to our executives under this long-term incentive compensation plan, following the requirements of FAS 123(R) “Accounting for Stock-Based Compensation”. Liabilities are measured at each reporting date at fair value, based on market rates. Compensation costs incurred are recognized, over the defined three-year vesting period. At December, 2008, we recognized a long-term liability of US$ 7, relating to 711,005 shares, through the Statements of Income.

20		Commitments and contingencies

(a)		We provided certain guarantees on behalf of the Goro Project pursuant to which we guaranteed payments due from Goro of up to a maximum amount of US$ 100 (“Maximum Amount”) in connection with an indemnity. We also provided additional guarantees covering the amounts payable by Goro regarding (a) amounts exceeding the Maximum Amount in connection with the indemnity and (b) certain other amounts under lease agreements.

		Sumic Nickel Netherlands B.V. — Sumic, a 21% shareholder of Goro, has a put option to sell to Vale Inco 25%, 50%, or 100% of its share in Goro. The put option can be exercised if the defined cost of the initial Goro project exceeds US$ 4,200 at project rates and an agreement cannot be reached on how to proceed with the project.

		We provided guarantees covering certain termination payments by Goro to a supplier under an electricity supply agreement (“ESA”) entered into in October 2004 for the Goro nickel-cobalt project. The amount of the termination payments guaranteed depends upon a number of factors, including whether any termination of the ESA occurs as a result of a default by Goro and the date of such early termination. If Goro defaults under the ESA prior to the anticipated start date for electricity supply, the termination payment, which currently is at its maximum amount, would be $ 145 million. Once the supply of electricity under the ESA to the project begins, the guaranteed amounts will decrease over the life of the ESA.

(b)		We and our subsidiaries are defendants in numerous legal actions in the normal course of business. Based on the advice of our legal counsel, management believes that the amounts recognized are sufficient to cover probable losses in connection with such actions.

		The provision for contingencies and the related judicial deposits are composed as follows:


	December 31, 2008				December 31, 2007
	Provision for				Provision for
	contingencies		Judicial deposits		contingencies		Judicial deposits
Labor and social security claims		458		378		519		372
Civil claims		386		242		311		135
Tax — related actions		828		518		1,605		613
Others		13		3		18		4

		1,685		1,141		2,453		1,124

Labor and social security — related actions principally comprise claims by Brazilian employees and former employees for (i) payment of time spent traveling from their residences to the work-place, (ii) additional health and safety related payments and (iii) various other matters, often in connection with disputes about the amount of indemnities paid upon dismissal and the one-third extra holiday pay.

Civil — actions principally related to claims made against us by contractors in Brazil in connection with losses alleged to have been incurred by them as a result of various past Government economic plans during which full inflation indexation of contracts was not permitted, as well, as for accidents and land appropriations disputes.

Tax – tax-related actions principally comprise challenges initiated by us, on certain taxes on revenues and value added taxes and uncertain tax positions. We continue to vigorously pursue our interests in all the above actions but recognize that we probably will incur some losses in the final instance, for which we have made provisions.

Judicial deposits are made by us following the court requirements, in order to be entitled to either initiate or continue a legal action. These amounts are released to us, upon receipt of a final favorable outcome from the legal action; in the case of an unfavorable outcome, the deposits are transferred to the prevailing party.

Contingencies settled in 2008, 2007 and 2006 totaled US$148, US$331, US$424, respectively. Provisions recognized in the years ended December 31, 2008, 2007 and 2006, totaled US$213, US$364, US$439, respectively, classified as other operating expenses. During 2008, we reversed a provision of US$ 300 previously recognized, in connection with a favorable decision obtained for a process regarding income tax.

In addition to the contingencies for which we have made provisions we are defendants in claims where in our opinion, and based on the advice of our legal counsel, the likelihood of loss is possible but not probable, in the total amount of US$ 2,476 at December 31, 2008, and for which no provision has been made (2007 – US$2,381).

(c)		At the time of our privatization in 1997, we issued shareholder revenue interest instruments known in Brazil as “debentures participativas” (debentures) to our then-existing shareholders, including the Brazilian Government. The terms of the debentures, were set to ensure that our pre-privatization shareholders, including the Brazilian Government, would participate alongside us in potential future financial benefits that we could be able to derive from exploiting our mineral resources.

		In preparation for the issuance of the debentures, we issued series B preferred shares on a one-for-one basis to all holders of our common shares and series A preferred shares. We then exchanged all of the series B shares for the debentures at par value. The debentures are not redeemable or convertible, and do not trade on a stapled basis or otherwise with our common or preferred shares. During 2002 we registered the debentures with the Brazilian Securities Commissions (CVM) in order to permit trading.

		Under the terms of the debentures, holders will have the right to receive semi-annual payments equal to an agreed percentage of our net revenues (revenues less value added tax) from certain identified mineral resources that we owned as of May 1997, to the extent that we exceed defined threshold production volumes of these resources, and from the sale of mineral rights that we owned as of May 1997. Our obligation to make payments to the holders will cease when the relevant mineral resources are exhausted at which time we are required to repay the original par value plus accrued interest. Based on current production levels, and estimates for new projects, we began payments relating to copper resources in 2004 and expect to start payments relating to iron ore resources from approximately 2013 for our Northern System and 2018 for our South steam System in Brazil, and payments related to other mineral resources at the end of the current decade.

		The table below summarizes the amounts we will be required to pay under the debentures based on the net revenues we earn from the identified mineral resources and the sale of mineral rights.


Area	Mineral	Required Payments by CVRD

South steam System	Iron ore	1.8% of net revenue, after total sales from May 1997 exceeds 1.7 billion tons.
Northern System	Iron ore	1.8% of net revenue, after total sales from May 1997 exceeds 1.2 billion tons.
Pojuca, Andorinhas, Liberdade and Sossego	Gold and copper	2.5% of net revenue from the beginning of commercialization.
Igarapé Bahia and Alemão	Gold and copper	2.5% of net revenue, after total sales from May 1997 exceeds 70 tons of gold.
Other areas, excluding Carajás / Serra Leste	Gold	2.5% of net revenue.
Other areas owned as of May 1997	Other minerals	1% of net revenue, 4 years after the beginning of the commercialization.
All areas	Sale of mineral rights owned as of May 1997	1% of the sales price.

In September 2008 and April 2008 we paid remuneration on these debentures of US$ 6 and US$ 5, respectively. During 2007 we paid a total of US$11.

(d)

We are committed under a take-or-pay agreement to purchase approximately 32,300 thousand metric tons of bauxite from Mineração Rio do Norte S.A. — MRN at a formula driven price, calculated based on the current London Metal Exchange — LME quotation for aluminum. Based on a market price of US$ 32,26 per metric ton as of December 31, 2008, this arrangement represents the following total commitment per metric ton as of December 31, 2008:


2009			281
2010			191
2011			187
2012			190
2013			192

			1,041

(e)		Description of Leasing Arrangements

		Part of our railroad operations include leased facilities. The 30-year lease, renewable for a further 30 years, expires in August, 2026 and is classified as an operating lease. At the end of the lease term, we are required to return the concession and the lease assets. In most cases, management expects that in the normal course of business, leases will be renewed.

		The following is a schedule by year of future minimum rental payments required under the railroad operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2008:


Year ending December 31:
2009			53
2010			53
2011			53
2012			54
2013 thereafter			714

Total minimum payments required			927

The total expenses of operating leases for the years ended December 31, 2008, 2007 and 2006 was US$ 53, US$ 62 and US$ 48, respectively.

During 2008, we entered into operating lease agreements with our joint ventures Nibrasco, Itabrasco and Kobrasco, under wich we leased four pellet plants. The lease terms are from 5 to 30 years.

The following is a schedule by year of future minimum rental payments required under the pellet plants operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2008:


Year ending December 31:
2009			81
2010			81
2011			81
2012			81
2013 thereafter			987

Total			1,311

(f)		Asset retirement obligations:

		We use various judgments and assumptions when measuring our asset retirement obligations.

		Changes in circumstances, law or technology may affect our estimates and we periodically review the amounts accrued and adjust them as necessary. Our accruals do not reflect unasserted claims because we are currently not aware of any such issues. Also the amounts provided are not reduced by any potential recoveries under cost sharing, insurance or indemnification arrangements because such recoveries are considered uncertain.

		The changes in the provisions for asset retirement obligations are as follows:


	Three-month period ended (unaudited)
	December 31,			September 30,			December 31,			As of December 31,
	2008			2008			2007			2008			2007
Beginning of period		1,000			1,101			859			975			676
Accretion expense		50			45			23			164			84
Liabilities settled in the current period		(2	)		(1	)		(8	)		(7	)		(15	)
Revisions in estimated cash flows		(45	)		—			83			(47	)		83
Cumulative translation adjustment		(116	)		(145	)		18			(198	)		147

End of period		887			1,000			975			887			975

21		Other expenses

		The line item “Other operating expenses” totaled US$ 1,254 in 2008 (US$ 607 in 2007). During the last quarter of 2008 we recognized certain expenses considered to be one off events which substantially caused the increase in 2008 as compared to 2007. The most significant items recognized during the last quarter of 2008 in this respect were: (i) a US$ 204 expense relating to additional payment relating to tax assessments on transportation services, (ii) inventory market value write-down of US$ 77, and (iii) write-off of intangible asset (patent right) in the amount of US$ 65.

22		Fair Value disclosure of Financial Assets and Liabilities

		In September 2006, the FASB issued SFAS N. 157, “Fair Value Measurements”, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information.

		In February 2007, the FASB issued SFAS N. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement N. 115”. SFAS N. 159 permits the choice of measuring financial instruments and certain other items at fair value. SFAS N. 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007.

		On January 1, 2008, the Company adopted SFAS N. 159 and elected not to apply the provisions of SFAS No. 159 to its eligible financial assets and financial liabilities on the date of adoption. Accordingly, the initial application of both SFAS N. 157 and SFAS N. 159 had no effect on the Company.


		Under SFAS N. 157, the inputs used to measure fair value must be classified into one of three level as follows:

		Level 1 — Quoted prices in an active market for identical assets or liabilities;

Level 2 — Observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 — Assets and liabilities whose significant value drivers are unobservable.

The valuation of assets measured at fair value in the Company’s Consolidated Balance Sheet at December 31, 2008 is summarized below:


				Fair Value Measurements
				Quoted prices in active
				markets for identical		Significant Other			Significant
	Fair value December 31,			assets or liabilities,		Observable Inputs			unobservable inputs
	2008			(Level 1)		(Level 2)			(Level 3)
Available-for-sale securities		2,408			2,408		—			—
Unrealized losses on derivatives		(539	)		—		(539	)		—
Other financial liabilities		(380	)		—		(380	)		—

Our long-term debt is reported at amortized costs, however its fair value measurements at December 31, 2008 are as follows:


	Carrying amount		Fair Value		Level 1		Level 2		Level 3

Long-term debt (less interests)		17,857		16,635		7,833		8,802		—

The carrying amount of our current financial instruments generally approximates fair market value because of the short-term maturity or frequent repricing of these instruments.

The market value of our listed long-term investments, where available, is disclosed in Note 12.

23		Segment and geographical information

		We adopt SFAS 131 “Disclosures about Segments of an Enterprise and Related Information” with respect to the information we present about our operating segments. SFAS 131 introduced a “management approach” concept for reporting segment information, whereby such information is required to be reported on the basis that the chief decision-maker uses internally for evaluating segment performance and deciding how to allocate resources to segments. We analyze our segment information on aggregated and disaggregated basis as follows:

		Ferrous products — comprises iron ore mining and pellet production, as well as our Brazilian Northern and Southern transportation systems, including railroads, ports and terminals, as they pertain to mining operations. Manganese mining and ferroalloys are also included in this segment.

		Non-ferrous — comprises the production of non-ferrous minerals, including nickel (co-products and by-products), potash, kaolin, copper and aluminum — comprises aluminum trading activities, alumina refining and aluminum metal smelting and investments in joint ventures and affiliates engaged in bauxite mining.

		Logistics — comprises our transportation systems as they pertain to the operation of our ships, ports and railroads for third-party cargos.

Others — comprises our investments in joint ventures and affiliates engaged in other businesses.

Information presented to senior management with respect to the performance of each segment is generally derived directly from the accounting records maintained in accordance with accounting practices adopted in Brazil together with certain minor inter-segment allocations.

Consolidated net income and principal assets are reconciled as follows:

Results by segment — before eliminations (Aggregated)


	Three-month period ended (unaudited)
	December 31, 2008																					September 30, 2008																					December 31, 2007
				() Non*																					() Non*																					() Non*
	Ferrous			ferrous			Aluminum			Logistics			Others			Eliminations			Consolidated			Ferrous			ferrous			Aluminum			Logistics			Others			Eliminations			Consolidated			Ferrous			ferrous			Aluminum			Logistics			Others			Eliminations			Consolidated
RESULTS
Gross revenues — Foreign		7,540			1,416			1,001			6			212			(3,848	)		6,327			11,577			2,536			1,122			14			203			(5,615	)		9,837			5,904			2,978			841			22			87			(2,863	)		6,969
Gross revenues — Domestic		685			71			179			303			53			(176	)		1,115			1,601			133			261			491			66			(267	)		2,285			1,116			113			217			388			1			(392	)		1,443
Cost and expenses		(5,764	)		(1,515	)		(929	)		(217	)		(165	)		4,024			(4,566	)		(8,202	)		(1,567	)		(1,143	)		(328	)		(185	)		5,882			(5,543	)		(4,895	)		(1,795	)		(907	)		(275	)		(113	)		3,255			(4,730	)
Research and development		(107	)		(112	)		—			(17	)		(59	)		—			(295	)		(92	)		(122	)		—			(31	)		(86	)		—			(331	)		(84	)		(92	)		—			(26	)		(60	)		—			(262	)
Depreciation, depletion and amortization		(171	)		(318	)		(38	)		(26	)		(15	)		—			(568	)		(270	)		(353	)		(47	)		(34	)		(9	)		—			(713	)		(262	)		(404	)		(36	)		(29	)		(6	)		—			(737	)
Impairment		—			(950	)		—			—			—			—			(950	)		—			—			—			—			—			—			—			—			—			—			—			—			—			—

Operating income		2,183			(1,408	)		213			49			26			—			1,063			4,614			627			193			112			(11	)		—			5,535			1,779			800			115			80			(91	)		—			2,683
Financial income		883			154			10			3			1			(804	)		247			923			201			12			3			—			(862	)		277			653			227			5			1			1			(829	)		58
Financial expenses		(825	)		(309	)		(18	)		(10	)		(41	)		804			(399	)		(954	)		(360	)		(11	)		(1	)		7			862			(457	)		(906	)		(462	)		(37	)		(10	)		33			829			(553	)
Gains (losses) on derivatives, net		(635	)		(15	)		64			—			—			—			(586	)		(639	)		16			36			—			—			—			(587	)		149			110			67			—			—			—			326
Foreign exchange and monetary gains (losses), net		35			25			(206	)		12			(107	)		—			(241	)		(102	)		4			(185	)		(41	)		3			—			(321	)		246			70			38			(5	)		(45	)		—			304
Gain on sale of investments		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		80			(38	)		22			93			(32	)		—			125			175			—			18			47			50			—			290			63			5			21			40			7			—			136
Income taxes		968			203			12			4			(2	)		—			1,185			190			(74	)		9			19			—			—			144			(298	)		104			(30	)		(2	)		10			—			(216	)
Minority interests		(6	)		(6	)		(20	)		—			5			—			(27	)		(14	)		(38	)		(20	)		—			12			—			(60	)		4			(86	)		(72	)		—			(11	)		—			(165	)

Net income		2,683			(1,394	)		77			151			(150	)		—			1,367			4,193			376			52			139			61			—			4,821			1,690			768			107			104			(96	)		—			2,573


Sales classified by geographic destination:
Foreign market
America, except United States		335			116			348			—			—			(271	)		528			601			216			322			—			—			(432	)		707			417			468			139			—			—			(240	)		784
United States		44			259			108			—			9			(70	)		350			313			406			93			—			—			(155	)		657			102			517			145			—			24			(116	)		672
Europe		2,715			464			353			(2	)		—			(1,639	)		1,891			3,714			735			478			12			8			(1,933	)		3,014			1,949			636			378			22			—			(1,044	)		1,941
Middle East/Africa/Oceania		543			15			50			—			54			(304	)		358			605			56			58			—			61			(303	)		477			204			134			45			—			63			(138	)		308
Japan		1,609			230			142			—			74			(703	)		1,352			1,304			323			158			—			98			(573	)		1,310			551			392			134			—			—			(226	)		851
China		1,240			127			—			8			—			(420	)		955			3,926			223			13			2			4			(1,686	)		2,482			1,958			400			—			—			—			(817	)		1,541
Asia, other than Japan and China		1,054			205			—			—			75			(441	)		893			1,114			577			—			—			32			(533	)		1,190			723			431			—			—			—			(282	)		872

		7,540			1,416			1,001			6			212			(3,848	)		6,327			11,577			2,536			1,122			14			203			(5,615	)		9,837			5,904			2,978			841			22			87			(2,863	)		6,969

Domestic market		685			71			179			303			53			(176	)		1,115			1,601			133			261			491			66			(267	)		2,285			1,116			113			217			388			1			(392	)		1,443

		8,225			1,487			1,180			309			265			(4,024	)		7,442			13,178			2,669			1,383			505			269			(5,882	)		12,122			7,020			3,091			1,058			410			88			(3,255	)		8,412


(*)		Other than Aluminum.

Operating segment — after eliminations (Disaggregated)


	As of and for the three-month period ended (unaudited)
	December 31, 2008
																											Property,		Addition to
																											Plant and		Property,
																											Equipment,		Plant and
																		Depreciation,									Net and		Equipment
	Revenues						Value			Net		Cost and						depletion and						Operating			Intangible		and
	Foreign		Domestic		Total		added tax			revenues		expenses			Net			amortization			Impairment			income			Assets		Intangible		Investments
Ferrous
Iron ore		3,105		431		3,536		(64	)		3,472		(1,497	)		1,975			(147	)		—			1,828			14,595		1,360		47
Pellets		914		114		1,028		(25	)		1,003		(522	)		481			(19	)		—			462			645		76		708
Manganese		19		5		24		(4	)		20		(17	)		3			—			—			3			18		1		—
Ferroalloys		92		83		175		(21	)		154		(69	)		85			(3	)		—			82			166		18		—
Pig iron		—		—		—		—			—		—			—			—			—			—			144		116		—

		4,130		633		4,763		(114	)		4,649		(2,105	)		2,544			(169	)		—			2,375			15,568		1,571		755

Non ferrous
Nickel and other products (*)		1,111		7		1,118		—			1,118		(1,298	)		(180	)		(295	)		(950	)		(1,425	)		21,729		1,233		53
Potash		—		23		23		(2	)		21		(15	)		6			(1	)		—			5			159		35		—
Kaolin		35		10		45		(2	)		43		(40	)		3			(5	)		—			(2	)		199		2		—
Copper concentrate		73		30		103		(6	)		97		(285	)		(188	)		(17	)		—			(205	)		3,543		89		—
Aluminum products		713		66		779		(3	)		776		(543	)		233			(38	)		—			195			3,831		115		140

		1,932		136		2,068		(13	)		2,055		(2,181	)		(126	)		(356	)		(950	)		(1,432	)		29,461		1,474		193

Logistics
Railroads		—		240		240		(40	)		200		(152	)		48			(22	)		—			26			1,431		10		326
Ports		—		70		70		(10	)		60		(41	)		19			(4	)		—			15			1,441		113		—
Ships		—		—		—		—			—		—			—			—			—			—			374		342		94

		—		310		310		(50	)		260		(193	)		67			(26	)		—			41			3,246		465		420
Others		265		36		301		(10	)		291		(195	)		96			(17	)		—			79			1,054		179		1,040

		6,327		1,115		7,442		(187	)		7,255		(4,674	)		2,581			(568	)		(950	)		1,063			49,329		3,689		2,408


(*)		Includes nickel co-products and by-products (copper, precious metals, cobalt and others).

Operating segment — after eliminations (Disaggregated)


	As of and for the three-month period ended (unaudited)
	September 30, 2008
																								Property,		Addition to
																								Plant and		Property,
																								Equipment,		Plant and
																		Depreciation,						Net and		Equipment
	Revenues						Value			Net		Cost and						depletion and			Operating			Intangible		and
	Foreign		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Assets		Intangible			Investments
Ferrous
Iron ore		5,149		1,026		6,175		(142	)		6,033		(2,075	)		3,958			(239	)		3,719			16,139		708			56
Pellets		1,095		317		1,412		(75	)		1,337		(746	)		591			(25	)		566			1,273		(2	)		848
Manganese		101		18		119		(6	)		113		(20	)		93			(1	)		92			79		1			—
Ferroalloys		212		152		364		(39	)		325		(141	)		184			(4	)		180			137		11			—
Pig iron		60		—		60		—			60		(21	)		39			—			39			176		5			—

		6,617		1,513		8,130		(262	)		7,868		(3,003	)		4,865			(269	)		4,596			17,804		723			904

Non ferrous
Nickel and other products (*)		1,933		12		1,945		—			1,945		(1,107	)		838			(314	)		524			23,355		555			93
Potash		—		103		103		(5	)		98		(36	)		62			(5	)		57			130		2			—
Kaolin		46		11		57		(2	)		55		(56	)		(1	)		(11	)		(12	)		232		(5	)		—
Copper concentrate		244		6		250		(1	)		249		(153	)		96			(22	)		74			1,838		73			—
Aluminum products		767		122		889		(25	)		864		(675	)		189			(49	)		140			4,391		24			126

		2,990		254		3,244		(33	)		3,211		(2,027	)		1,184			(401	)		783			29,946		649			219

Logistics
Railroads		—		386		386		(64	)		322		(207	)		115			(26	)		89			1,696		75			289
Ports		—		87		87		(14	)		73		(65	)		8			(9	)		(1	)		1,637		44			—
Ships		—		—		—		—			—		—			—			—			—			33		1			109

		—		473		473		(78	)		395		(272	)		123			(35	)		88			3,366		120			398
Others		230		45		275		(10	)		265		(189	)		76			(8	)		68			3,346		61			1,152

		9,837		2,285		12,122		(383	)		11,739		(5,491	)		6,248			(713	)		5,535			54,462		1,553			2,673


(*)		Includes nickel co-products and by-products (copper, precious metals, cobalt and others).

Operating segment — after eliminations (Disaggregated)


	As of and for the three-month period ended (unaudited)
	December 31, 2007
																								Property,		Addition to
																								Plant and		Property,
																								Equipment,		Plant and
																		Depreciation,						Net and		Equipment
	Revenues						Value			Net		Cost and						depletion and			Operating			Intangible		and
	Foreign		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Assets		Intangible		Investments
Ferrous
Iron ore		2,818		531		3,349		(74	)		3,275		(1,522	)		1,753			(222	)		1,531			17,031		958		60
Pellets		524		202		726		(46	)		680		(490	)		190			(26	)		164			754		31		741
Manganese		21		8		29		(1	)		28		(21	)		7			(2	)		5			79		1		—
Ferroalloys		181		102		283		(26	)		257		(137	)		120			(8	)		112			168		12		—
Pig iron		24		—		24		—			24		(22	)		2			—			2			198		6		—

		3,568		843		4,411		(147	)		4,264		(2,192	)		2,072			(258	)		1,814			18,230		1,008		801

Non ferrous
Nickel and other products (*)		2,480		11		2,491		—			2,491		(1,398	)		1,093			(370	)		723			23,668		705		299
Potash		—		58		58		(3	)		55		(35	)		20			(7	)		13			218		6		—
Kaolin		62		12		74		(2	)		72		(40	)		32			(10	)		22			295		2		—
Copper concentrate		175		28		203		(6	)		197		(146	)		51			(21	)		30			1,841		86		—
Aluminum products		586		86		672		(24	)		648		(492	)		156			(37	)		119			4,448		281		184

		3,303		195		3,498		(35	)		3,463		(2,111	)		1,352			(445	)		907			30,470		1,080		483

Logistics
Railroads		—		322		322		(52	)		270		(194	)		76			(23	)		53			1,735		462		342
Ports		11		56		67		(9	)		58		(52	)		6			(6	)		—			1,371		58		—
Ships		—		—		—		—			—		—			—			—			—			36		—		107

		11		378		389		(61	)		328		(246	)		82			(29	)		53			3,142		520		449
Others		87		27		114		(6	)		108		(194	)		(86	)		(5	)		(91	)		2,783		139		1,189

		6,969		1,443		8,412		(249	)		8,163		(4,743	)		3,420			(737	)		2,683			54,625		2,747		2,922


(*)		Includes nickel co-products and by-products (copper, precious metals, cobalt and others).

Operating segment — after eliminations (Disaggregated)


	As of and for the year ended December 31,
	2008																					2007																					2006
				() Non*																					() Non*																					() Non*
	Ferrous			ferrous			Aluminum			Logistics			Others			Eliminations			Consolidated			Ferrous			ferrous			Aluminum			Logistics			Others			Eliminations			Consolidated			Ferrous			ferrous			Aluminum			Logistics			Others			Eliminations			Consolidated
RESULTS

Gross revenues — Foreign		33,369			9,752			3,916			51			588			(15,842	)		31,834			21,126			13,338			3,506			61			242			(10,437	)		27,836			15,729			4,199			3,125			67			54			(7,029	)		16,145

Gross revenues — Domestic		4,342			491			850			1,640			234			(882	)		6,675			3,865			487			751			1,519			1			(1,344	)		5,279			2,738			277			474			1,373			7			(651	)		4,218
Cost and expenses		(24,143	)		(5,838	)		(3,948	)		(1,097	)		(617	)		16,724			(18,919	)		(16,882	)		(7,301	)		(3,307	)		(983	)		(310	)		11,781			(17,002	)		(12,004	)		(3,301	)		(2,597	)		(970	)		(56	)		7,680			(11,248	)
Research and development		(338	)		(380	)		—			(101	)		(266	)		—			(1,085	)		(175	)		(329	)		—			(39	)		(190	)		—			(733	)		(123	)		(166	)		—			(10	)		(182	)		—			(481	)
Depreciation, depletion and amortization		(1,021	)		(1,452	)		(171	)		(128	)		(35	)		—			(2,807	)		(917	)		(1,039	)		(110	)		(103	)		(17	)		—			(2,186	)		(632	)		(219	)		(66	)		(76	)		(4	)		—			(997	)
Impairment		—			(950	)		—			—			—			—			(950	)		—			—			—			—			—			—			—			—			—			—			—			—			—			—

Operating income		12,209			1,623			647			365			(96	)		—			14,748			7,017			5,156			840			455			(274	)		—			13,194			5,708			790			936			384			(181	)		—			7,637
Financial income		3,048			768			30			10			1			(3,255	)		602			2,514			578			17			9			25			(2,848	)		295			789			97			20			28			2			(609	)		327
Financial expenses		(3,479	)		(1,431	)		(59	)		(15	)		(36	)		3,255			(1,765	)		(4,008	)		(1,152	)		(166	)		(17	)		(14	)		2,848			(2,509	)		(1,526	)		(172	)		(107	)		(8	)		(18	)		609			(1,222	)
Gains (losses) on derivatives, net		(719	)		(71	)		(22	)		—			—			—			(812	)		854			(90	)		153			—			—			—			917			(15	)		86			(187	)		—			—			—			(116	)
Foreign exchange and monetary gains (losses), net		767			10			(275	)		(32	)		(106	)		—			364			2,302			93			181			(15	)		(2	)		—			2,559			206			214			119			(11	)		1			—			529
Gain on sale of investments		—			80			—			—			—			—			80			—			81			—			237			459			—			777			443			—			—			—			231			—			674
Equity in results of affiliates and joint ventures and investments		543			(38	)		62			133			94			—			794			301			9			84			125			76			—			595			312			—			76			96			226			—			710
Income taxes		130			(626	)		(71	)		23			9			—			(535	)		(1,959	)		(1,005	)		(231	)		(16	)		10			—			(3,201	)		(976	)		(250	)		(187	)		(18	)		(1	)		—			(1,432	)
Minority interests		(8	)		(151	)		(105	)		—			6			—			(258	)		(31	)		(444	)		(326	)		(1	)		—			—			(802	)		(157	)		(190	)		(232	)		—			—			—			(579	)

Net income		12,491			164			207			484			(128	)		—			13,218			6,990			3,226			552			777			280			—			11,825			4,784			575			438			471			260			—			6,528


Sales classified by geographic destination:
Foreign market
America, except United States		1,805			1,051			1,164			1			—			(1,201	)		2,820			1,449			1,555			850			23			—			(1,026	)		2,851			1,249			438			726			30			—			(823	)		1,620
United States		648			1,789			412			1			9			(392	)		2,467			432			2,462			308			—			81			(318	)		2,965			506			450			95			—			54			(237	)		868
Europe		11,215			2,598			1,534			26			9			(5,933	)		9,449			6,823			2,589			1,606			33			—			(3,716	)		7,335			5,465			1,020			1,346			19			—			(2,667	)		5,183
Middle East/Africa/Oceania		1,904			220			174			—			154			(952	)		1,500			827			396			142			—			161			(412	)		1,114			767			218			263			1			—			(239	)		1,010
Japan		4,516			1,293			600			1			245			(1,918	)		4,737			2,131			2,041			584			—			—			(929	)		3,827			1,779			523			548			—			—			(662	)		2,188
China		9,743			864			23			21			4			(3,949	)		6,706			7,570			1,457			—			4			—			(3,168	)		5,863			4,781			499			126			16			—			(1,716	)		3,706
Asia, other than Japan and China		3,538			1,937			9			1			167			(1,497	)		4,155			1,894			2,838			16			1			—			(868	)		3,881			1,182			1,050			21			1			—			(684	)		1,570

		33,369			9,752			3,916			51			588			(15,842	)		31,834			21,126			13,338			3,506			61			242			(10,437	)		27,836			15,729			4,198			3,125			67			54			(7,028	)		16,145
Domestic market		4,342			491			850			1,640			234			(882	)		6,675			3,865			487			751			1,519			1			(1,344	)		5,279			2,738			277			474			1,373			7			(651	)		4,218

		37,711			10,243			4,766			1,691			822			(16,724	)		38,509			24,991			13,825			4,257			1,580			243			(11,781	)		33,115			18,467			4,475			3,599			1,440			61			(7,679	)		20,363


(*)		Other than Aluminum.

Operating segment — after eliminations (Disaggregated)


	As of and for the year ended December 31,
	2008
																											Property,		Addition to
																											Plant and		Property,
																											Equipment,		Plant and
																		Depreciation,									Net and		Equipment
	Revenues						Value			Net		Cost and						depletion and						Operating			Intangible		and
	Foreign		Domestic		Total		added tax			revenues		expenses			Net			amortization			Impairment			income			Assets		Intangible		Investments
Ferrous
Iron ore		15,102		2,673		17,775		(364	)		17,411		(6,547	)		10,864			(876	)		—			9,988			14,595		3,645		47
Pellets		3,481		820		4,301		(189	)		4,112		(2,394	)		1,718			(112	)		—			1,606			645		127		708
Manganese		221		45		266		(15	)		251		(77	)		174			(5	)		—			169			18		3		—
Ferroalloys		704		507		1,211		(128	)		1,083		(457	)		626			(22	)		—			604			166		32		—
Pig iron		146		—		146		—			146		(67	)		79			(3	)		—			76			144		122		—

		19,654		4,045		23,699		(696	)		23,003		(9,542	)		13,461			(1,018	)		—			12,443			15,568		3,929		755

Non ferrous
Nickel and other products (*)		7,785		44		7,829		—			7,829		(4,425	)		3,404			(1,323	)		(950	)		1,131			21,729		2,813		53
Potash		—		295		295		(16	)		279		(120	)		159			(19	)		—			140			159		43		—
Kaolin		167		42		209		(9	)		200		(213	)		(13	)		(32	)		—			(45	)		199		6		—
Copper concentrate		787		106		893		(22	)		871		(683	)		188			(77	)		—			111			3,543		283		—
Aluminum products		2,681		361		3,042		(66	)		2,976		(2,288	)		688			(172	)		—			516			3,831		440		140

		11,420		848		12,268		(113	)		12,155		(7,729	)		4,426			(1,623	)		(950	)		1,853			29,461		3,585		193

Logistics
Railroads		—		1,303		1,303		(205	)		1,098		(749	)		349			(103	)		—			246			1,431		121		326
Ports		11		293		304		(39	)		265		(198	)		67			(26	)		—			41			1,441		242		—
Ships		—		—		—		—			—		—			—			—			—			—			374		343		94

		11		1,596		1,607		(244	)		1,363		(947	)		416			(129	)		—			287			3,246		706		420
Others		749		186		935		(30	)		905		(703	)		202			(37	)		—			165			1,054		752		1,040

		31,834		6,675		38,509		(1,083	)		37,426		(18,921	)		18,505			(2,807	)		(950	)		14,748			49,329		8,972		2,408


(*)		Includes nickel co-products and by-products (copper, precious metals, cobalt and others).

Operating segment — after eliminations (Disaggregated)


	As of and for the year ended December 31,
	2007
																								Property,		Addition to
																								Plant and		Property,
																								Equipment,		Plant and
																		Depreciation,						Net and		Equipment
	Revenues						Value			Net		Cost and						depletion and			Operating			Intangible		and
	Foreign		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Assets		Intangible		Investments
Ferrous
Iron ore		9,873		2,035		11,908		(286	)		11,622		(4,520	)		7,102			(777	)		6,325			17,031		2,496		60
Pellets		2,151		587		2,738		(132	)		2,606		(1,860	)		746			(87	)		659			754		92		741
Manganese		48		21		69		(5	)		64		(66	)		(2	)		(7	)		(9	)		79		2		—
Ferroalloys		445		274		719		(70	)		649		(442	)		207			(25	)		182			168		22		—
Pig iron		81		—		81		—			81		(57	)		24			(5	)		19			198		34		—

		12,598		2,917		15,515		(493	)		15,022		(6,945	)		8,077			(901	)		7,176			18,230		2,646		801

Non ferrous
Nickel and other products (*)		11,664		125		11,789		—			11,789		(6,077	)		5,712			(927	)		4,785			23,668		2,088		299
Potash		—		178		178		(10	)		168		(108	)		60			(23	)		37			218		19		—
Kaolin		202		36		238		(9	)		229		(228	)		1			(33	)		(32	)		295		33		—
Copper concentrate		663		139		802		(30	)		772		(456	)		316			(64	)		252			1,841		197		—
Aluminum products		2,418		304		2,722		(66	)		2,656		(1,717	)		939			(111	)		828			4,448		856		184

		14,947		782		15,729		(115	)		15,614		(8,586	)		7,028			(1,158	)		5,870			30,470		3,193		483

Logistics
Railroads		—		1,220		1,220		(199	)		1,021		(636	)		385			(88	)		297			1,735		491		342
Ports		13		254		267		(46	)		221		(177	)		44			(22	)		22			1,371		102		—
Ships		17		21		38		(3	)		35		(44	)		(9	)		(3	)		(12	)		36		12		107

		30		1,495		1,525		(248	)		1,277		(857	)		420			(113	)		307			3,142		605		449

Others		261		85		346		(17	)		329		(474	)		(145	)		(14	)		(159	)		2,783		207		1,189

		27,836		5,279		33,115		(873	)		32,242		(16,862	)		15,380			(2,186	)		13,194			54,625		6,651		2,922


(*)		Includes nickel co-products and by-products (copper, precious metals, cobalt and others).

Operating segment — after eliminations (Disaggregated)


	As of and for the year ended December 31,
	2006
																								Property,		Addition to
																		Depreciation,						Plant and		Property,
	Revenues						Value			Net		Cost and						depletion and			Operating			Equipment,		Plant and
	Foreign		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Net		Equipment		Investments
Ferrous
Iron ore		8,167		1,860		10,027		(271	)		9,756		(4,060	)		5,696			(528	)		5,168			13,235		2,616		48
Pellets		1,590		389		1,979		(86	)		1,893		(1,210	)		683			(53	)		630			593		110		529
Manganese		39		16		55		(3	)		52		(97	)		(45	)		(4	)		(49	)		65		19		—
Ferroalloys		342		166		508		(43	)		465		(443	)		22			(19	)		3			186		34		—

		10,138		2,431		12,569		(403	)		12,166		(5,810	)		6,356			(604	)		5,752			14,079		2,779		577

Non ferrous
Nickel and other products (*)		2,786		16		2,802		—			2,802		(2,267	)		535			(124	)		411			17,193		483		222
Potash		—		143		143		(8	)		135		(84	)		51			(23	)		28			178		16		—
Kaolin		188		30		218		(9	)		209		(182	)		27			(27	)		—			249		19		—
Copper concentrate		690		89		779		(20	)		759		(246	)		513			(49	)		464			1,386		150		—
Aluminum products		2,220		161		2,381		(37	)		2,344		(1,354	)		990			(65	)		925			2,829		749		164

		5,884		439		6,323		(74	)		6,249		(4,133	)		2,116			(288	)		1,828			21,835		1,417		386

Logistics
Railroads		—		1,011		1,011		(177	)		834		(488	)		346			(72	)		274			720		95		222
Ports		15		246		261		(44	)		217		(137	)		80			(16	)		64			222		12		—
Ships		52		52		104		(8	)		96		(97	)		(1	)		(5	)		(6	)		45		2		—

		67		1,309		1,376		(229	)		1,147		(722	)		425			(93	)		332			987		109		222

Others		56		39		95		(6	)		89		(352	)		(263	)		(12	)		(275	)		1,106		126		1,168

		16,145		4,218		20,363		(712	)		19,651		(11,017	)		8,634			(997	)		7,637			38,007		4,431		2,353


(*)		Includes nickel co-products and by-products (copper, precious metals, cobalt and others).

24		Related party transactions

		Balances from transactions with major related parties are as follows:


	As of December 31,
	2008				2007
	Assets		Liabilities		Assets		Liabilities
AFFILIATED COMPANIES AND JOINT VENTURES
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS		7		34		59		46
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO		37		64		53		49
Companhia Nipo-Brasileira de Pelotização — NIBRASCO		29		71		108		30
Companhia Coreano-Brasileira de Pelotização — KOBRASCO		1		22		24		13
Baovale Mineração S.A.		2		20		16		41
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS		18		—		34		—
Minas da Serra Geral S.A. — MSG		—		13		—		14
MRS Logística S.A.		8		219		11		35
Mineração Rio Norte S.A.		8		38		—		29
Samarco Mineração S.A.		10		—		10		o
Korea Nickel Corporation		38		—		9		—
Mitsui & CO, LTD		—		—		—		21
Others		32		24		24		10

		190		505		348		288

Current		190		414		345		287

Long-term		—		91		3		1

These balances are included in the following balance sheet classifications:


	As of December 31,
	2008				2007
	Assets		Liabilities		Assets		Liabilities
Current assets
Accounts receivable		137		—		281		—
Loans and advances to related parties		53		—		64		—
Other assets
Loans and advances to related parties		—		—		3		—
Current liabilities
Suppliers		—		302		—		281
Loans from related parties		—		112		—		6
Long-term debt		—		91		—		1

		190		505		348		288

Income and expenses from the principal transactions and financial operations carried out with major related parties are as follows:


	Year ended of December, 31
	2008				2007				2006
	Income		Expense		Income		Expense		Income		Expense
AFFILIATED COMPANIES AND JOINT VENTURES
Companhia Nipo-Brasileira de Pelotização — NIBRASCO		105		393		386		328		363		292
Samarco Mineração S.A.		259		—		117		—		79		—
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO		240		163		233		163		204		58
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS		342		378		247		195		224		159
Companhia Coreano-Brasileira de Pelotização — KOBRASCO		101		234		220		270		226		191
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS		651		—		442		—		410		—
Valesul Alumínio S.A.		—		—		—		—		11		—
Mineração Rio Norte S.A.		—		249		—		232		—		234
Gulf Industrial Investment Company — GIIC		—		—		—		—		56		2
MRS Logística S.A.		9		829		17		593		14		516
Others		34		34		30		29		3		39

		1,741		2,280		1,692		1,810		1,590		1,491

These amounts are included in the following statement of income line items:


	Year ended of December, 31
	2008				2007				2006
	Income		Expense		Income		Expense		Income		Expense

Sales / Cost of iron ore and pellets		1,698		1,369		1,649		960		1,553		712
Revenues / expense from logistic services		25		624		17		593		13		516
Sales / Cost of aluminum products		—		249		—		232		11		234
Financial income/expenses		18		38		26		24		13		16
Others		—		—		—		1		—		13

		1,741		2,280		1,692		1,810		1,590		1,491

		Additionally we have loans payable to Mitsui & Co, Ltd, Banco Nacional de Desenvolvimento Social and BNDES Participações S.A in the amounts of US$ 4, US$ 604 and US$ 305, accruing with interest at market rates, which fall due through 2013. We also maintan cash equivalent balances with Banco Bradesco S.A. in the amount of US$ 18 at December 31, 2008.

25		Derivative financial instruments

		Risk Management Policy

		We consider the effective management of risk a key objective to support our growth strategy and financial flexibility. In furtherance of this objective, the Board of Directors has established an enterprise risk management policy and a risk management committee. Under the policy, we measure, monitor, and manage risk at the portfolio level, using a single framework, and consider the natural diversification of our portfolio.

		The risk management committee is responsible to the assist our executive officers in overseeing and reviewing information regarding our enterprise risk management activities including the principles, significant policies, risk management process and procedures and instruments employed to manage risk. The risk management committee reports periodically to the executive board how the risks have been monitored, what are the most important risks and their impact on our cash flows.

Any risk mitigation strategy will only be implemented, whenever necessary, to support our corporate strategy or to maintain our target level of financial flexibility. The risk management policy and the risk management norms, that complement the normatives of risk management governance model, explicitly prohibit speculative transactions with derivatives and require the diversification of operations and counterparties.

Under SFAS 133 “Accounting for Derivative Financial Instruments and Hedging Activities,” as amended by SFAS 137 and SFAS 138, we recognize all derivatives on our balance sheet at fair value, and the gain or loss in fair value is included in current earnings, unless designated as a cash flow hedge.

The main market risks we face are interest rate risk, exchange rate risk and product price risk. We manage some of these risks through the use of derivative instruments. Our risk management activities follow the risk management policy, which requires diversification of transactions and counter-parties. We monitor and evaluate our overall position regularly in order to evaluate financial results and impact on our cash flow. We also periodically review the credit limits and creditworthiness of our hedging counter-parties.

Foreign exchange and interest rate risk

Vale’s cash flows are exposed to volatility of several different currencies. While most of our product prices are indexed to US dollars, representing around 94% of the total revenue, most of our costs, disbursements and investments are indexed to currencies different than the US dollar, mainly Brazilian reais and Canadian dollars.

Derivatives instruments may be used in order to reduce Vale’s potential cash flow volatility arising from the currencies mismatch between the currencies witch the debt is denominated and revenues are generated. Vale’s foreign exchange and interest rate derivative portfolio consists, basically, of interest rate swaps to convert floating cash flows in Brazilian reais to fixed or floating US dollar cash flows, without any leverage.

Vale is also exposed to interest rate risks on loans and financings. Our US dollar denominated floating rate debt consists mainly of loans including export pre-payments, commercial banks and multilateral organizations loans. In general, our US dollars floating rate debt is subject to changes in the Libor (London Interbank Offer Rate in US dollars). To mitigate the impact of the interest rate volatility on its cash flows, Vale takes advantage of natural hedges resulting from the positive correlation of metal prices and US dollar floating rates. When natural hedges are not present, we may opt to realize the same effect by using financial instruments.

Our Real denominated debt subject to floating interest rates are debentures, loans obtained from Banco Nacional de Desenvolvimento Econômico e Social (BNDES) and property and services acquisition financing in the Brazilian market. These debts are mainly linked to CDI and TJLP.

The swap transactions entered into have settlement dates similar to the interest and principal payment dates, taking into account the liquidity restrictions of the market. At each settlement date, the results on the swap transactions partially offset the impact of the US dollar / Brazilian reais exchange rate in our obligations, contributing to a stable flow of cash disbursements in US dollars for interest and/or principal payment of our real denominated debt.

In the event of an appreciation (depreciation) of the Brazilian reais against US dollar, the negative (positive) impact on our Real denominated debt obligations (interest and/or principal payment) measured in US dollars will be almost totally offset by a positive (negative) effect from any existing swap transaction, regardless of the US dollar / Brazilian Reais exchange rate on the payment date.

We have other exposures associated with our outstanding debt portfolio. In order to reduce cash flow volatility associated with a financing from KFW (Kreditanstalt Für Wiederaufbau) indexed to Euribor, Vale entered into a swap contract where the cash flows in Euros are converted into cash flows in US dollars.

Product Price Risk

Vale is also exposed to several market risks associated with global commodities prices volatilities.

Currently, derivative transactions entered into related to commodities prices are nickel, aluminum, copper, gold platinum and natural gas derivatives and all have the same purpose of mitigating Vale’s cash flow volatility.

Nickel — The Company has purchased nickel future contracts in the London Metal Exchange (LME), with the purpose of maintaining its exposure to nickel price variation, regarding the fact that, in some cases, the commodity is sold at a fixed price to some customers. Vale has also sold nickel futures in the LME, in order to minimize the risk of mismatch between the pricing on the costs of intermediate products and finished goods.

Aluminum — In order to reduce cash flow volatility after Inco’s acquisition when Vale increased its leverage, we entered in aluminum hedging operations, which matured in December 2008.

Copper — Vale Inco Ltd., Vale’s wholly-owned subsidiary, makes use of hedging to protect the price mismatch between the date of copper scrap purchase and the date of selling the finished good.

PGMs and other precious metals — Transactions regarding gold and platinum are executed in order to manage the risk associated with the volatility of these commodities prices. Platinum and gold hedging transactions matured in December 2008.

Natural gas — Vale uses natural gas swap contracts to minimize the impact of price fluctuation of this input cost in the cash flow.

In addition to the contracts mentioned above, Vale IncoLtd., Vale’s wholly-owned subsidiary, has nickel concentrate and raw materials purchase agreements, where there are provisions based on nickel and copper future prices behavior. These provisions are considered embedded derivatives.

There is also an embedded derivative related to energy in our subsidiary Albras on which we have no unrealized gain as of December 31, 2008 and US$17 as of December 31, 2007.

The asset (liability) balances and the change in fair value of derivative financial instruments are as follows (the quarterly information is unaudited):


	Interest
	rates						Products of
	(LIBOR) /						aluminum
	Currencies			Gold			area			Copper			Nickel			Platinum			Total

Unrealized gains (losses) at October 31, 2008		168			(10	)		(46	)		(40	)		38			(2	)		108
Financial settlement		(54	)		9			(24	)		(27	)		32			1			(63	)
Unrealized gains (losses) in the period		(649	)		(12	)		65			49			(36	)		(2	)		(585	)
Effect of exchange rate changes		(38	)		13			5			18			(2	)		3			(1	)


Unrealized gains (losses) at December 31, 2008		(573	)		—			—			—			32			—			(541	)


Unrealized gains (losses) at July 1, 2008		1,201			(21	)		(189	)		(166	)		37			(21	)		841
Gain (Loss) recognized upon consolidation of Inco		—			—			—			—			—			—			—
Financial settlement		(176	)		10			57			62			20			6			(21	)
Unrealized gains (losses) in the period		(635	)		(14	)		75			33			(18	)		14			(545	)
Effect of exchange rate changes		(222	)		15			11			31			(1	)		(1	)		(167	)


Unrealized gains (losses) at September 30, 2008		168			(10	)		(46	)		(40	)		38			(2	)		108


Unrealized gains (losses) at October 31, 2007		649			(39	)		(176	)		(356	)		3			(25	)		56
Gain (Loss) recognized upon consolidation of Inco		—			—			—			—			—			—
Financial settlement		(200	)		10			16			63			26			5			(80	)
Unrealized gains (losses) in the period		149			(5	)		67			106			13			(4	)		326
Effect of exchange rate changes		28			(2	)		(5	)		(1	)		—			—			20


*Unrealized gains (losses) at December 31, 2007 ()**		626			(36	)		(98	)		(188	)		42			(24	)		322


Unrealized gains (losses) at January 1, 2008		626			(36	)		(98	)		(188	)		42			(24	)		322
Financial settlement		(394	)		41			120			173			38			27			5
Unrealized gains (losses) in the period		(682	)		(30	)		(18	)		(29	)		(46	)		(6	)		(811	)
Effect of exchange rate changes		(123	)		25			(4	)		44			(2	)		3			(57	)


Unrealized gains (losses) at December 31, 2008		(573	)		—			—			—			32			—			(541	)


Unrealized gains (losses) at January 1, 2007		(10	)		(53	)		(318	)		(298	)		16			(20	)		(683	)
Financial settlement		(290	)		33			112			240			(38	)		13			70
Unrealized gains (losses) in the period		854			(7	)		153			(129	)		63			(17	)		917
Effect of exchange rate changes		72			(9	)		(45	)		(1	)		1			—			18


*Unrealized gains (losses) at December 31, 2007 ()**		626			(36	)		(98	)		(188	)		42			(24	)		322


(*)		At December 31, 2007, US$ 5 was recorded in long-term liabilities.

Changes for the three month periods ended December 31, 2008, September 30, 2008 and December 31, 2007 are unaudited.

Unrealized gains (losses) in the period are included in our income statement under the caption of Financial expenses and Foreign exchange and monetary gains (losses), net.

Final maturity dates for the above instruments are as follows:


Cross currency interest rate swaps		December 2019
Copper concentrate		March 2009
Nickel		March 2011

Under U.S. GAAP, all derivatives, whether designated in hedging relationships or not, are required to be recorded in the balance sheet at fair value. A derivative must be designated in a hedging relationship in order to qualify for hedge accounting. These requirements include a determination of what portions of hedges are deemed to be effective versus ineffective. In general, a hedging relationship is effective when a change in the fair value of the derivative is offset by an equal and opposite change in the fair value of the underlying hedged item. In accordance with these requirements, effectiveness tests are performed in order to assess effectiveness and quantify ineffectiveness for all designated hedges.

		At December 31, 2008, we had no outstanding cash flow hedges. A cash flow hedge is a hedge of the exposure to variability in expected future cash flows that is attributable to a particular risk such as a forecasted purchase or sale. If a derivative is designated as a cash flow hedge, the effective portions of the changes in the fair value of the derivative are recorded in other comprehensive income and are recognized in earnings when the hedged item affects earnings. Ineffective portions of changes in the fair value of the derivatives designated as hedges are recognized in earnings. Under U.S. GAAP, if a portion of a derivative contract is excluded for purposes of effectiveness testing, such as time value, the value of such excluded portion is included in earnings. At December 31, 2008, unrealized net losses in respect of derivative instruments which were not qualified for hedge accounting under United States GAAP amounted to US$ 811. The unrealized net gain as of December 31, 2007 amounted to US$ 869.

26		Subsequent events

		On January 30, 2009 we entered into a purchase and sale agreement with Rio Tinto Plc to acquire iron ore (in Brazil) and potash (in Argentina and Canada) assets. The price to be paid for the iron assets amounts to US$ 750, while the potash deposits will be acquired for US$ 850. Negotiations are still ongoing.

Supplemental Financial Information (Unaudited)

The following unaudited information provides additional details in relation to certain financial ratios.

EBITDA — Earnings Before Financial Expenses, Minority Interests, Gain on Sale of Investments, Foreign Exchange and Monetary Gains (Losses), Equity in Results of Affiliates and Joint Ventures and Change in Provision for Losses on Equity Investments, Income Taxes, Depreciation and Amortization

(a)		EBITDA represents operating income plus depreciation, amortization and depletion plus impairment/gain on sale of property, plant and equipment plus dividends received from equity investees.

(b)		EBITDA is not a U.S. GAAP measure and does not represent cash flow for the periods presented and should not be considered as an alternative to net income (loss), as an indicator of our operating performance or as an alternative to cash flow as a source of liquidity.

(c)		Our definition of EBITDA may not be comparable with EBITDA as defined by other companies.

(d)		Although EBITDA, as defined above, does not provide a U.S. GAAP measure of operating cash flows, our management uses it to measure our operating performance and financial analysts in evaluating our business commonly use it.

Selected financial indicators for the main affiliates and joint ventures are available on our website, www.vale.com, under “investor relations”

Indexes on Vale’s Consolidated Debt (Supplemental information


	Three-month period ended
	December 31,			September 30,			December 31,			As of December 31,
	2008			2008			2007			2008			2007
Current debt
Current portion of long-term debt — unrelated parties		633			733			1,249			633			1,249
Short-term debt		—			46			167			—			167
Loans from related parties		77			16			6			77			6

		710			795			1,422			710			1,422
Long-term debt
Long-term debt — unrelated parties		17,535			18,393			17,608			17,535			17,608

Gross debt (current plus long-term debt)		18,245			19,188			19,030			18,245			19,030


Interest paid over:
Short-term debt		—			(9	)		(8	)		11			(49	)
Long-term debt		314			1,938			(361	)		1,255			(1,289	)

Interest paid		314			1,929			(369	)		1,266			(1,338	)
EBITDA		2,697			6,374			3,532			19,018			15,774
Stockholders’ equity		42,556			51,218			33,276			42,556			33,276
LTM (1) EBITDA / LTM (1) Interest paid		15.02			15.03			11.79			15.02			11.79
Gross Debt / LTM (1) EBITDA		0.96			0.97			1.21			0.96			1.21
Gross debt / Equity Capitalization (%)		13			27			36			13			36

Financial expenses
Interest expense		(334	)		(293	)		(313	)		(1,194	)		(1,348	)
Labor and civil claims and tax-related actions		(23	)		(23	)		(39	)		(99	)		(98	)
Tax on financial transactions — CPMF		—			—			(27	)		—			(132	)
Others		(42	)		(141	)		(175	)		(472	)		(939	)

		(399	)		(457	)		(554	)		(1,765	)		(2,517	)


Financial income
Cash and cash equivalents		217			252			32			520			105
Others		30			25			26			82			190

		247			277			58			602			295


Derivatives		(586	)		(587	)		316			(812	)		931


Financial income (expenses), net		(738	)		(767	)		(180	)		(1,975	)		(1,291	)

Foreign exchange and monetary gain (losses), net
Cash and cash equivalents		1,427			1,104			(8	)		2,457			(100	)
Loans		(2,266	)		(2,169	)		500			(3,102	)		2,923
Others		598			744			(177	)		1,009			(270	)

		(241	)		(321	)		315			364			2,553

Financial result, net		(979	)		(1,088	)		135			(1,611	)		1,262


(1)		Last twelve months

Calculation of EBITDA (Supplemental information — Unaudited)


	Three-month period ended									As of December 31,
	December 31, 2008			September 30, 2008			December 31, 2007			2008			2007

Operating income		1,063			5,535			2,683			14,748			13,194
Depreciation		568			713			737			2,807			2,186
Impairment		950			—			—			950			—

		2,581			6,248			3,420			18,505			15,380
Dividends received		116			126			112			513			394

EBITDA		2,697			6,374			3,532			19,018			15,774


Net operating revenues		7,255			11,739			8,163			37,426			32,242
Margin EBITDA		37.2	%		54.3	%		43.3	%		50.8	%		48.9	%

Adjusted EBITDA x Operating Cash Flows (Supplemental information — Unaudited)


	Three-month period ended
	December 31, 2008						September 30, 2008						December 31, 2007
				Operating						Operating						Operating
	EBITDA			cash flows			EBITDA			cash flows			EBITDA			cash flows
Net income		1,367			1,367			4,821			4,821			2,573			2,573
Income tax — deferred		(219	)		(219	)		(621	)		(621	)		(394	)		(394	)
Income tax — current		(966	)		—			477			—			610			—
Equity in results of affiliates and joint ventures and other investments		(125	)		(125	)		(290	)		(290	)		(136	)		(136	)
Foreign exchange and monetary gains, net		241			740			321			1,133			(304	)		(266	)
Financial expenses, net		738			(3	)		767			83			169			(23	)
Minority interests		27			27			60			60			165			165
Net working capital		—			2,259			—			(1,524	)		—			(130	)
Others		—			613			—			831			—			(176	)

Operating income		1,063			4,659			5,535			4,493			2,683			1,613
Depreciation, depletion and amortization		568			568			713			713			737			737
Impairment		950			950			—			—			—			—
Dividends received		116			116			126			126			112			112

		2,697			6,293			6,374			5,332			3,532			2,462


Operating cash flows					6,293						5,332						2,462
Income tax					(966	)					477						610
Foreign exchange and monetary gains (losses)					(499	)					(812	)					(38	)
Financial expenses					741						684						192
Net working capital					(2,259	)					1,524						130
Others					(613	)					(831	)					176

EBITDA					2,697						6,374						3,532


	Year ended of December 31,
	2008						2007
				Operating						Operating
	EBITDA			cash flows			EBITDA			cash flows
Net income		13,218			13,218			11,825			11,825
Income tax — deferred		(803	)		(803	)		(700	)		(700	)
Income tax — current		1,338			—			3,901			—
Equity in results of affiliates and joint ventures and other investments		(794	)		(794	)		(595	)		(595	)
Foreign exchange and monetary gains, net		(364	)		451			(2,559	)		(2,827	)
Financial expenses, net		1,975			116			1,297			102
Minority interests		258			258			802			802
Gain on sale of investments		(80	)		(80	)		(777	)		(777	)
Net working capital		—			(707	)		—			1,236
Others		—			1,185			—			(634	)

Operating income		14,748			12,844			13,194			8,432
Depreciation, depletion and amortization		2,807			2,807			2,186			2,186
Impairment		950			950			—			—
Dividends received		513			513			394			394

		19,018			17,114			15,774			11,012


Operating cash flows					17,114						11,012
Income tax					1,338						3,901
Foreign exchange and monetary gains (losses)					(815	)					268
Financial expenses					1,859						1,195
Net working capital					707						(1,236	)
Others					(1,185	)					634

EBITDA					19,018						15,774

Board of Directors, Fiscal Council, Advisory committees and Executive Officers


Board of Directors		Fiscal Council

Sérgio Ricardo Silva Rosa		Marcelo Amaral Moraes
Chairman		Chairman

Mário da Silveira Teixeira Júnior		Aníbal Moreira dos Santos
Vice-President		Antônio José de Figueiredo Ferreira
		Bernard Appy

Francisco Augusto da Costa e Silva
João Batista Cavaglieri		Alternate
Jorge Luiz Pacheco		Marcos Coimbra
José Ricardo Sasseron		Marcus Pereira Aucélio
Luciano Galvão Coutinho		Oswaldo Mário Pêgo de Amorim Azevedo
Masami lijima
Oscar Augusto de Camargo Filho		Executive Officers
Renato da Cruz Gomes
Sandro Kohler Marcondes		Roger Agnelli
		Chief Executive Officer

Advisory Committees of the Board of Directors

		Carla Grasso
Controlling Committee Luiz Carlos de Freitas		Executive Officer for Human Resources and Corporate Services
Paulo Ricardo Ultra Soares
Paulo Roberto Ferreira de Medeiros		Demian Fiocca
		Executive Officer for Management and Sustainability

Executive Development Committee
João Moisés de Oliveira		Eduardo de Salles Bartolomeo
José Ricardo Sasseron		Executive Officer for Logistics, Engineering and Project Management

Oscar Augusto de Camargo Filho
		Fabio de Oliveira Barbosa
Strategic Committee		Chief Financial Officer and Investor Relations
Roger Agnelli
Mário da Silveira Teixeira Júnior		José Carlos Martins
Oscar Augusto de Camargo Filho		Executive Officer for Ferrous Minerals
Sérgio Ricardo Silva Rosa
		Tito Botelho Martins
Finance Committee		Executive Officer for Non Ferrous
Fabio de Oliveira Barbosa
Ivan Luiz Modesto Schara		Marcus Vinícius Dias Severini
Luiz Maurício Leuzinger		Chief Officer of Accounting and Control Department
Wanderlei Viçoso Fagundes
		Vera Lúcia de Almeida Pereira Elias
Governance and Sustainability Committee		Chief Accountant
Jorge Luiz Pacheco		CRC-RJ — 043059/O-8
Renato da Cruz Gomes
Ricardo Simonsen

Equity Investee Information — 12/31/2008

Aluminum Area — Valesul (Additional information — Unaudited)


		2008															2007
		As of and for the three-month periods ended															As of and for the three-month periods ended
Information		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total
Quantity sold — external market	MT (thousand)		4			7			6			4			21			9			10			8			8			35
Quantity sold — internal market	MT (thousand)		16			15			19			16			66			10			16			15			30			71

Quantity sold — total	MT (thousand)		20			22			25			20			87			19			26			23			38			106


Average sales price — external market	US$		2.653,70			2.846,14			2.679,23			2.818,91			2.861,40			2.828,64			2.902,69			2.750,68			2.580,48			2.777,48
Average sales price — internal market	US$		3.786,95			4.168,23			3.321,93			2.575,30			3.695,60			4.037,71			4.068,49			4.045,36			3.415,84			3.722,07
Average sales price — total	US$		3.560,30			3.747,56			3.148,89			2.624,02			3.494,25			3.512,03			3.652,13			3.696,79			3.177,17			3.410,18


Stockholders’ equity	US$		391			453			330			272			272			141			374			391			389			389


Net operating revenues	US$		58			70			81			44			253			70			72			65			65			272
Cost of products	US$		(48	)		(55	)		(75	)		(38	)		(216	)		(48	)		(55	)		(52	)		(57	)		(212	)
Other expenses / revenues	US$		(4	)		(9	)		(6	)		(5	)		(24	)		(4	)		(4	)		(6	)		(3	)		(17	)
Depreciation, amortization and depletion	US$		4			4			4			3			15			2			2			3			4			11

EBITDA	US$		10			10			4			4			28			20			15			10			9			54
Depreciation, amortization and depletion	US$		(4	)		(4	)		(4	)		(3	)		(15	)		(2	)		(2	)		(3	)		(4	)		(11	)

EBIT	US$		6			6			—			1			13			18			13			7			5			43
Net financial result	US$		(1	)		—			7			4			10			—			—			1			(2	)		(1	)

Income before income tax and social contribution	US$		5			6			7			5			23			18			13			8			3			42
Income tax and social contribution	US$		(2	)		(4	)		(3	)		(2	)		(11	)		(3	)		(3	)		(3	)		(5	)		(14	)

Net income	US$		3			2			4			3			12			15			10			5			(2	)		28

Aluminum Area — MRN (Additional information — Unaudited)


		2008															2007
		As of and for the three-month periods ended															As of and for the three-month periods ended
Information		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total

Quantity sold — external market	MT (thousand)		1.369			1.573			1.496			1.557			5.995			1.386			1.356			1.522			1.365			5.629
Quantity sold — internal market	MT (thousand)		2.621			2.949			3.268			3.415			12.253			3.350			2.969			2.939			2.993			12.251

Quantity sold — total	MT (thousand)		3.990			4.522			4.764			4.972			18.248			4.736			4.325			4.461			4.358			17.880


Average sales price — external market	US$		61,52			34,93			34,71			36,96			41,47			33,35			32,47			33,29			34,42			33,38
Average sales price — internal market	US$		53,89			31,24			31,96			33,35			36,87			27,04			27,04			27,69			28,38			27,52
Average sales price — total	US$		56,51			32,52			32,83			35,16			38,56			28,89			28,74			29,60			30,27			29,37

Long-term indebtedness, gross	US$		46			115			97			90			90			38.936			35.488			26.516			163.768			163.768
Short-term indebtedness, gross	US$		245			221			226			163			163			204.362			223.553			207.048			28.566			28.566

Total indebtedness, gross	US$		291			336			323			253			253			243.298			259.041			233.564			192.334			192.334


Stockholders’ equity	US$		493			432			315			347			347			305			354			407			459			459


Net operating revenues	US$		117			130			139			150			536			132			125			128			131			516
Cost of products	US$		(63	)		(82	)		(81	)		(75	)		(301	)		(64	)		(66	)		(60	)		(68	)		(258	)
Other expenses / revenues	US$		(8	)		2			(3	)		—			(9	)		(5	)		(4	)		(6	)		(6	)		(21	)
Depreciation, amortization and depletion	US$		14			17			10			13			54			13			14			13			14			54

EBITDA	US$		60			67			65			88			280			76			69			75			71			291
Depreciation, amortization and depletion	US$		(14	)		(17	)		(10	)		(13	)		(54	)		(13	)		(14	)		(13	)		(14	)		(54	)

EBIT	US$		46			50			55			75			226			63			55			62			57			237
Net financial result	US$		(2	)		(11	)		(3	)		1			(15	)		(1	)		(1	)		(2	)		—			(4	)

Income before income tax and social contribution	US$		44			39			52			76			211			62			54			60			57			233
Income tax and social contribution	US$		(10	)		(19	)		(5	)		(21	)		(55	)		(6	)		(5	)		(7	)		(5	)		(23	)

Net income	US$		34			20			47			55			156			56			49			53			52			210

Aluminum Area — Albras (Additional information — Unaudited) — Consolidated Subsidiary


		2008															2007
		As of and for the three-month periods ended															As of and for the three-month periods ended
Information		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total

Quantity sold — external market	MT (thousand)		109			99			117			108			433			108			123			108			104			443
Quantity sold — internal market	MT (thousand)		7			6			7			6			26			7			6			7			6			26

Quantity sold — total	MT (thousand)		116			105			124			114			459			115			129			115			110			469


Average sales price — external market	US$		2.486,87			2.939,31			2.888,76			2.150,39			2.589,98			2.688,76			2.726,53			2.631,55			2.405,80			2.611,76
Average sales price — internal market	US$		2.307,59			2.640,89			2.625,72			2.380,23			2.827,94			2.500,55			2.688,83			2.599,78			2.196,61			2.372,90
Average sales price — total	US$		2.476,70			2.920,77			2.874,64			2.162,48			2.603,46			2.677,30			2.724,78			2.585,19			2.393,38			2.598,49

Long-term indebtedness, gross	US$		283			301			267			250			250			319			303			306			301			301
Short-term indebtedness, gross	US$		111			90			128			133			133			4			9			2			40			40

Total indebtedness, gross	US$		394			391			395			383			383			323			312			308			341			341


Stockholders’ equity	US$		973			1.098			948			782			782			736			788			936			1.004			1.004


Net operating revenues	US$		292			310			346			245			1.193			309			353			299			268			1.229
Cost of products	US$		(222	)		(222	)		(254	)		(194	)		(892	)		(197	)		(232	)		(206	)		(207	)		(842	)
Other expenses / revenues	US$		(18	)		(20	)		(18	)		(24	)		(80	)		(11	)		(15	)		(17	)		(19	)		(62	)
Depreciation, amortization and depletion	US$		8			8			9			6			31			7			8			8			8			31

EBITDA	US$		60			76			83			33			252			108			114			84			50			356
Depreciation, amortization and depletion	US$		(8	)		(8	)		(9	)		(6	)		(31	)		(7	)		(8	)		(8	)		(8	)		(31	)

EBIT	US$		52			68			74			27			221			101			106			76			42			325
Net financial result	US$		(66	)		37			(38	)		(6	)		(73	)		16			(9	)		67			37			111

Income (loss) before income tax and social contribution	US$		(14	)		105			36			21			148			117			97			143			79			436
Income tax and social contribution	US$		(9	)		(37	)		(9	)		7			(48	)		(23	)		(58	)		(42	)		(8	)		(131	)

Net income (loss)	US$		(23	)		68			27			28			100			94			39			101			71			305

Aluminum Area — Alunorte (Additional information — Unaudited) — Consolidated Subsidiary


		2008															2007
		As of and for the three-month periods ended															As of and for the three-month periods ended
Information		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total

Quantity sold — external market	MT (thousand)		814			832			975			1.336			3.957			699			769			828			933			3.229
Quantity sold — internal market	MT (thousand)		235			258			301			250			1.044			244			252			248			271			1.015

Quantity sold — total	MT (thousand)		1.049			1.090			1.276			1.586			5.001			943			1.021			1.076			1.204			4.244


Average sales price — external market	US$		322,36			372,73			378,60			286,74			334,79			344,85			349,61			340,23			312,26			335,38
Average sales price — internal market	US$		287,59			340,49			342,74			324,54			358,65			309,77			311,69			306,88			275,46			300,38
Average sales price — total	US$		314,57			365,10			370,14			292,70			339,77			335,77			340,00			332,54			303,98			327,01

Long-term indebtedness, gross	US$		740			829			855			855			855			528			557			466			556			556
Short-term indebtedness, gross	US$		20			—			29			31			31			—			—			18			—			—

Total indebtedness, gross	US$		760			829			884			886			886			528			557			484			556			556


Stockholders’ equity	US$		2.287			2.633			2.217			1.794			1.794			1.686			1.903			2.197			2.307			2.307


Net operating revenues	US$		331			399			473			456			1.659			314			342			369			370			1.395
Cost of products	US$		(274	)		(288	)		(352	)		(331	)		(1.245	)		(181	)		(217	)		(246	)		(290	)		(934	)
Other expenses / revenues	US$		(13	)		(14	)		(12	)		(20	)		(59	)		(2	)		(15	)		(7	)		(15	)		(39	)
Depreciation, amortization and depletion	US$		19			20			16			15			70			12			14			13			15			54

EBITDA	US$		63			117			125			120			425			143			124			129			80			476
Depreciation, amortization and depletion	US$		(19	)		(20	)		(16	)		(15	)		(70	)		(12	)		(14	)		(13	)		(15	)		(54	)

EBIT	US$		44			97			109			105			355			131			110			116			65			422
Net financial result	US$		(57	)		58			(117	)		(97	)		(213	)		19			(14	)		34			35			74

Income (loss) before income tax and social contribution	US$		(13	)		155			(8	)		8			142			150			96			150			100			496
Income tax and social contribution	US$		(7	)		(34	)		22			7			(12	)		(19	)		(12	)		(38	)		(16	)		(85	)

Net income (loss)	US$		(20	)		121			14			15			130			131			84			112			84			411

Pelletizing Affiliates — Hispanobras (Additional information — Unaudited)


		2008															2007
		As of and for the three-month periods ended															As of and for the three-month periods ended
Information		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total

Quantity sold — external market	MT (thousand)		404			400			618			—			1.422			565			504			527			394			1.990
Quantity sold — internal market	MT (thousand)		710			805			554			396			2.465			800			620			510			545			2.475

Quantity sold — total	MT (thousand)		1.114			1.205			1.172			396			3.887			1.365			1.124			1.037			939			4.465


Average sales price — external market	US$		71,45			203,07			227,18			0,00			176,15			69,26			77,40			72,50			73,25			72,97
Average sales price — internal market	US$		75,95			203,58			236,04			146,47			164,94			72,97			79,73			74,88			76,94			75,93
Average sales price — total	US$		74,32			203,41			231,37			146,47			169,04			71,43			78,69			73,67			75,39			74,61

Short-term indebtedness, gross	US$		75			58			7			—			—			6			9			14			46			46

Total indebtedness, gross	US$		75			58			7			—			—			6			9			14			46			46


Stockholders’ equity	US$		90			166			158			143			143			89			78			86			84			84


Net operating revenues	US$		83			248			164			52			547			97			89			76			72			334
Cost of products	US$		(75	)		(143	)		(118	)		(36	)		(372	)		(77	)		(74	)		(66	)		(78	)		(295	)
Other expenses / revenues	US$		(2	)		(2	)		(2	)		(2	)		(8	)		(1	)		(2	)		(1	)		(1	)		(5	)
Depreciation, amortization and depletion	US$		1			1			1			1			4			1			—			—			3			4

EBITDA	US$		7			104			45			15			171			20			13			9			(4	)		38
Depreciation, amortization and depletion	US$		(1	)		(1	)		(1	)		(1	)		(4	)		(1	)		—			—			(3	)		(4	)

EBIT	US$		6			103			44			14			167			19			13			9			(7	)		34
Net financial result	US$		1			(4	)		7			9			13			(2	)		(1	)		(1	)		(1	)		(5	)

Income (loss) before income tax and social contribution	US$		7			99			51			23			180			17			12			8			(8	)		29
Income before income tax and social contribution	US$		(3	)		(34	)		(18	)		(8	)		(63	)		(6	)		(5	)		(2	)		2			(11	)

Net income	US$		4			65			33			15			117			11			7			6			(6	)		18

Pelletizing Affiliates — Samarco (Additional information — Unaudited)


		2008															2007
		As of and for the three-month periods ended															As of and for the three-month periods ended
Information		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total

Quantity sold — Pellets	MT (thousand)		3.010			4.327			5.519			3.413			16.269			3.003			3.742			3.241			4.373			14.359
Quantity sold — Iron ore	MT (thousand)		168			140			154			202			664			463			638			302			358			1.761

Average sales price — Pellets	US$		105,51			142,07			152,30			156,17			141,95			77,51			82,38			83,61			82,58			81,70
Average sales price — Iron ore	US$		47,61			98,95			73,86			85,18			76,08			46,79			46,78			45,30			49,14			47,01

Long-term indebtedness, gross	US$		800			799			800			800			800			738			817			808			800			800
Short-term indebtedness, gross	US$		591			846			987			783			783			192			324			398			572			572

Total indebtedness, gross	US$		1.391			1.645			1.787			1.583			1.583			930			1.141			1.206			1.372			1.372


Stockholders’ equity	US$		1.078			1.213			926			732			732			688			754			878			970			970


Net operating revenues	US$		331			613			843			553			2.340			253			338			299			365			1.255
Cost of products	US$		(164	)		(277	)		(314	)		(155	)		(910	)		(109	)		(140	)		(129	)		(184	)		(562	)
Other expenses / revenues	US$		(43	)		(98	)		(55	)		(67	)		(263	)		(32	)		(63	)		(32	)		(67	)		(194	)
Depreciation, amortization and depletion	US$		12			16			30			22			80			10			11			12			12			45

EBITDA	US$		136			254			504			353			1.247			122			146			150			126			544
Depreciation, amortization and depletion	US$		(12	)		(16	)		(30	)		(22	)		(80	)		(10	)		(11	)		(12	)		(12	)		(45	)

EBIT	US$		124			238			474			331			1.167			112			135			138			114			499
Gain on investments accounted for by the equity method	US$		3			(3	)		1			3			4			2			3			7			2			14
Net financial result	US$		4			122			(281	)		(244	)		(399	)		35			14			25			15			89

Income (loss) before income tax and social contribution	US$		131			357			194			90			772			149			152			170			131			602
Income tax and social contribution	US$		66			(162	)		(30	)		(17	)		(143	)		(29	)		(34	)		(35	)		(21	)		(119	)

Net income (loss)	US$		197			195			164			73			629			120			118			135			110			483

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Date: March 9, 2009	COMPANHIA VALE DO RIO DOCE (Registrant)
	By:	/s/ Roberto Castello Branco
		Roberto Castello Branco
		Director of Investor Relations